iShares Introduces S&P Emerging Markets Infrastructure Index Fund (EMIF)

isharesiShares launched the S&P Emerging Markets Infrastructure Index Fund (EMIF) today. According to the prospectus, “THE FUND SEEKS INVESTMENT RESULTS THAT CORRESPOND GENERALLY TO THE PRICE AND YIELD PERFORMANCE, BEFORE FEES AND EXPENSES, OF THE S&P EMERGING MARKETS INFRASTRUCTURE INDEXtm (THE “UNDERLYING INDEX”).”

The principal investment strategies are as follows:

THE UNDERLYING INDEX IS DESIGNED TO TRACK PERFORMANCE OF 30 OF THE LARGEST PUBLICLY LISTED COMPANIES IN THE INFRASTRUCTURE INDUSTRY IN THE EMERGING MARKETS.AS OF MAY29, 2009, THE UNDERLYING INDEX WAS COMPRISED OF STOCKS OF COMPANIES IN THE FOLLOWING MARKETS: ARGENTINA, BRAZIL, CHILE, CHINA, THE
CZECH REPUBLIC, EGYPT, MALAYSIA, MEXICO, SOUTH KOREA AND THE UNITED ARAB EMIRATES. AS OF MAY 29, 2009, EACH OF THE UNDERLYING INDEX’S CONSTITUENTS HAD A MINIMUM MARKET CAPITALIZATION OF $250 MILLION.

BGFa USES A “PASSIVE” OR INDEXING APPROACH TO TRY TO ACHIEVE THE FUND’S INVESTMENT OBJECTIVE. UNLIKE MANY INVESTMENT COMPANIES, THE FUND DOES NOT TRY TO “BEAT” THE INDEX IT TRACKS AND DOES NOT SEEK TEMPORARY DEFENSIVE POSITIONS WHEN MARKETS DECLINE OR APPEAR OVERVALUED.

INDEXING MAY ELIMINATE THE CHANCE THAT THE FUND WILL SUBSTANTIALLY OUTPERFORM ITS UNDERLYING INDEX BUT ALSO MAY REDUCE SOME OF THE RISKS OF ACTIVE MANAGEMENT, SUCH AS POOR SECURITY SELECTION. INDEXING SEEKS TO ACHIEVE LOWER COSTS AND BETTER AFTER-TAX PERFORMANCE BY KEEPING PORTFOLIO TURNOVER LOW IN COMPARISON TO ACTIVELY MANAGED INVESTMENT COMPANIES.

THE FUND INVESTS AT LEAST 90% OF ITS ASSETS IN SECURITIES OF THE UNDERLYING INDEX AND IN DEPOSITARY RECEIPTS REPRESENTING SECURITIES OF THE UNDERLYING INDEX THE FUND MAY INVEST THE REMAINDER OF ITS ASSETS IN SECURITIES NOT INCLUDED IN ITS UNDERLYING INDEX BUT WHICH BGFA BELIEVES WILL HELP THE FUND TRACK ITS UNDERLYING INDEX, AND IN FUTURES CONTRACTS, OPTIONS ON FUTURES CONTRACTS, OPTIONS AND SWAPS AS WELL AS CASH AND CASH EQUIVALENTS, INCLUDING SHARES OF MONEY MARKET FUNDS ADVISED BY BGFA.

BGFA USES A REPRESENTATIVE SAMPLING INDEXING STRATEGY TO MANAGE THE FUND.

INDUSTRY CONCENTRATION POLICY. THE FUND WILL CONCENTRATE ITS INVESTMENTS (I.E., HOLD 25% OR MORE OF ITS TOTAL ASSETS) IN A PARTICULAR INDUSTRY OR GROUP OF INDUSTRIES TO APPROXIMATELY THE SAME EXTENT THAT ITS UNDERLYING INDEX IS CONCENTRATED. FOR PURPOSES OF THIS LIMITATION, SECURITIES OF THE U.S. GOVERNMENT (INCLUDING ITS AGENCIES AND INSTRUMENTALITIES) AND REPURCHASE AGREEMENTS COLLATERALIZED BY U.S. GOVERNMENT SECURITIES ARE NOT CONSIDERED TO BE ISSUED BY MEMBERS OF ANY INDUSTRY. BECAUSE ALL OF THE SECURITIES INCLUDED IN THE UNDERLYING INDEX ARE ISSUED BY UTILITY, ENERGY AND TRANSPORTATION INFRASTRUCTURE COMPANIES, THE FUND WILL BE CONCENTRATED IN THE INFRASTRUCTURE INDUSTRY.

EMIF will go head-to-head with the PowerShares Emerging Markets Infrastructure Portfolio (PXR), that launched in October of this year and currently has $45.5 million in assets under management.

Index Universe summises, in a recent article today, that, “On a top-line basis, EMIF seems more focused on transportation and electrical utilities, while PXR has more exposure to mining and basic materials.

On a country basis, the two funds are very different. EMIF has more than twice the exposure to China as PXR, while PXR has much deeper exposure to Indonesia, Russia and South Africa.” For their full story click: HERE

The S&P Emerging Markets Infrastructure Index Fund (EMIF) iShares page can be found: HERE

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