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Emerging Global Advisors sets up emerging market ETFs.

Byline: (Staff Writer)

The first-ever emerging market sector family of Exchange-Traded Funds (ETFs) has been set up by Emerging Global Advisors (EGA).

The new Emerging Global Shares (EGS) family of ETFs is based on the Dow Jones Emerging Markets Sector Titans Indexes and is designed to provide institutional investors with broad-based exposure to leading emerging market companies across multiple industry sectors. The initial funds will focus on Energy and Metals & Mining. All the ETFs will be listed on the NYSE Arca electronic exchange.

The initial group of ETFs will include the following:

The EGS Emerging Markets Energy Fund seeks to track, before fees and expenses, the performance of the Dow Jones Emerging Markets Oil & Gas Titans 30 Index, and will trade under the symbol (NYSE Arca: EEO). The Dow Jones Index includes 30 of the largest emerging markets companies in the oil & gas industry across 13 countries.

The EGS Emerging Markets Metals & Mining Fund is designed to track, before fees and expenses, the performance of the Dow Jones Emerging Markets Metals & Mining Titans 30 Index, and will trade under the symbol (NYSE Arca: EMT). The Dow Jones Index includes 30 of the largest emerging market companies in the metals and mining sectors across nine countries.

Robert Holderith, Chief Executive Officer at EGA said each ETF has exposure to a diversified mix of countries reducing single-country economic and political risk, an important concern for many emerging markets investors. Components of the underlying indexes have been selected by Dow Jones Indexes based on float-adjusted market capitalisation, revenue, and net profits.

Emerging Global Advisors is a thematic research and asset management firm founded by ETF industry veteran Holderith in 2008 to develop and market the EGS family of ETFs. Prior to starting EGA, Holderith was Managing Director, Institutional Sales and Investment Analytics, at ProShare Advisors. Before that, he was a Director at UBS Wealth Management Group in New York City, where he developed ETF models for retail and institutional advisors.

The management team also includes Richard Kang, who serves as chief investment officer (CIO) and director of research at EGA. Kang has held a number of senior level positions in the financial services industry, including roles as CIO and portfolio manager at various firms primarily involved in the active use of indexed products. He has substantial experience with ETFs and derivative-based products as well, and writes and speaks broadly on the use of ETFs in portfolio management and optimisation. EGA plans to leverage Kang's considerable expertise in working closely with institutional clients to research and implement strategies for utilising the emerging markets ETFs in portfolios.

"The Emerging Global Shares ETFs are designed to give investors the ability to execute active investment management strategies in markets where the liquidity to trade is not always available," said Kang. Kang noted that capital markets in some developing countries have experienced periods of illiquidity and have been closed on occasion.

"Because they are listed in the US, the Emerging Global Shares ETFs will not be directly affected by such closings and will continue to trade during periods of illiquidity in foreign markets. In addition, the ETFs may be borrowed and shorted, a practice sometimes prohibited on emerging markets exchanges," he added.

EGA said it plans to introduce a total of 10 sector-based emerging markets ETFs based on the modified market cap Dow Jones indexes, as well as products built on a Basic Resources index, and additional composites of multiple indexes.

"Current ETF offerings generally limit investors to country or regional exposure, or require a more general investment in emerging markets," said Holderith. "We think there will be considerable interest in a family of products that provides diversified emerging market sector exposure in a highly transparent, highly liquid ETF format."

2009 CPI Financial. All rights reserved.

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Publication:CPI Financial
Date:May 27, 2009
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