iShares Launches Beyond BRIC ETF

isharesGiven the ongoing concerns in most of the popular emerging market nations, investors are increasingly looking for funds that provide exposure to countries outside the BRIC (Brazil, Russia, India and China) group of nations.

Having sensed that, iShares, the world’s biggest exchange-traded fund company, has recently come out with a fund that seeks to provide exposure to some of the smallest emerging market nations, while excluding the large BRIC markets.

The new ETF trades under the name iShares MSCI Emerging Markets Horizon ETF , and we have highlighted some of the key details of the product below:

EMHZ in Focus

The newly launched ETF seeks to provide exposure to large- and mid-cap stocks in the smallest emerging market countries by tracking the MSCI Emerging Markets Horizon Index.

The fund provides no exposure to popular emerging market countries like the BRIC nations and also excludes the highly advanced emerging markets of South Korea, Taiwan and South Africa (read: Emerging Market ETFs in Trouble on Stronger Dollar?).

Instead a smaller emerging market – Mexico – dominates the fund, followed by Malaysia, Indonesia and Thailand.

The fund also has single-digit exposure to other smaller emerging market nations like Turkey, Poland, Chile, Colombia, the Philippines and Greece.

Presently, the fund holds 185 securities with less than 20% allocated to its top 10 holdings. The fund charges 50 basis points as fees as compared to the average category expense ratio of 64 basis points.

How does it fit in a portfolio?

The ETF could be an interesting pick for those seeking exposure to emerging market nations beyond BRICs and other larger emerging market nations. And with some of the troubles that we have seen in BRICs this year — especially in Russia and China — this ETF could be worth considering for those who believe that the best days for the BRICs are over and that other emerging markets are ready to lead the space.

Further, the issuer believes that many smaller emerging market countries are in earlier stages of development than their larger counterparts and thus have plenty of scope for growth.

Also, smaller emerging market countries are usually less correlated with the global economy and also have low levels of correlation to each other. Hence, this product is expected to provide increased diversification to investors.

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