iShares Joins Emerging Markets Small Cap ETF Party

August 29, 2011 by  
Filed under Commentary, ETF IPOs (New ETFs)

BlackRock’s new iShares MSCI Emerging Markets Small Cap Index Fund (EEMS), introduced on August 19, has already gathered assets of more than $66 million.  As its name describes, the new ETF targets small cap stocks from emerging markets.  “Small cap” is defined as the companies representing the bottom 14% of market capitalization.

The underlying index has a total of 1,987 holdings from the 21 MSCI-designated emerging market countries.  EEMS employs a representative sampling technique that currently includes only 633 holdings.   Country allocations tilt heavily toward Asia with Taiwan at 19.9%, South Korea 17.4%, China 16.4%, India 9.7%, South Africa 8.3%, Brazil 5.9%, Malaysia 4.2%, Indonesia 3.8%, Thailand 3.3%, Turkey 2.4%, and others 8.7%.

The sector breakdown is Consumer Discretionary 17.1%, Industrials 16.9%, Financials 16.6%, Technology 15.1%, Materials 14.9%, Consumer Staples 8.7%, Health Care 4.9%, Utilities 2.9%, Energy 2.1%, and Telecommunications 0.8%.

Two established ETFs have lower expense ratios than the 0.69% of EEMS.  WisdomTree Emerging Markets SmallCap Dividend (DGS) (overview) was launched in October 2007 and has a 0.63% expense ratio.  SPDR S&P Emerging Markets Small Cap (EWX) (overview) was introduced in May 2008 with a 0.65% expense ratio.

Investors desiring more precise exposure can choose from eight single-country emerging market small cap ETFs:

The EEMS overview page currently has little specific information on the fund, but it does contain links to the fact sheet (pdf) and prospectus (pdf).

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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