EPHE: The First Philippines ETF Arrives

September 30, 2010 by  
Filed under Commentary, ETF IPOs (New ETFs), ETFs

The first Philippines ETF hit the market on September 29, 2010 in the form of iShares MSCI Philippines Investable Market Index Fund (EPHE). The underlying MSCI index is a free-float adjusted market capitalization weighted index designed to measure the performance of the top 99% (by market cap) of equities listed in the Philippines.

According to the EPHE fact sheet (pdf), the index has 27 constituents and the fund currently holds 26.  The five largest stocks are Philippine Long Distance Tel 12.7%, SM Investments Corp 9.7%, Ayala Land Inc 9.5%, Manila Electric Company 9.0%, and Bank of Philippine Islands 7.6%.

Sector breakdown for the index as of 8/31/10 is quite lopsided with Financials at 46.5%, Utilities 17.2%, Telecommunications 15.7%, Industrials 15.0%, Consumer Discretionary 4.7%, Technology 0.6%, Materials 0.5%, and essentially no exposure to Consumer Staples, Health Care, and Energy.  An expense ratio of 0.65% is indicated in the EPHE overview.

Being the first ETF targeting the Philippines means that EPHE does not have any direct competition.  The country has a small 0.50% weighting in the MSCI Emerging Markets Index and a barely noticeable 0.06% weighting in the MSCI All World Index.  Many investors will likely be content to get their minor Philippine exposure in the more diversified emerging market funds.  Investors seeking to overweight the Philippines in their portfolio will find EPHE a convenient way to accomplish that task.

MSCI currently has 21 countries classified as emerging markets.  There are now only three without their own single-country ETF:  Czech Republic, Hungary, and Morocco.

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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