State Street to launch emerging market ETF without BRIC countries

August 30, 2013 Leave a comment

State Street to launch emerging market ETF without BRIC countries

New fund would allow investors to get more exposure to some of the smaller, potentially higher-growth areas of the market

Aug 28, 2013 @ 4:57 pm (Updated 5:00 pm) EST

State Street Corp., the second- largest provider of exchange-traded funds worldwide, is seeking to counter its biggest rivals’ dominance of emerging-market stock ETFs with a fund that excludes Brazil, Russia, India and China, known as the BRIC nations. State Street asked the Securities and Exchange Commission for permission to open the SPDR MSCI Beyond BRIC ETF, according to a regulatory filing dated yesterday from the Boston-based firm. The ETF would invest in developing-market stocks in Chile, Columbia, the Czech Republic, Indonesia, South Africa and Turkey, among others.“This would allow investors to get more exposure to some of the smaller, potentially higher-growth areas of the market,” Todd Rosenbluth, director of ETF and mutual fund research at S&P Capital IQ in New York, said in a telephone interview.

The new product would expand State Street’s offerings in an area dominated by two ETFs from Vanguard Group Inc. andBlackRock Inc., which hold a combined $84.6 billion, or 83 percent of all money in U.S. registered emerging-market equity ETFs that don’t use leverage, according to data compiled by Bloomberg. State Street’s top entry in the category is the $749 million SPDR S&P Emerging Markets SmallCap ETF.

U.S.-based emerging-market ETFs have lost $20.7 billion, or about 17 percent of assets, this year as investors have withdrawn from funds and the value of their holdings has declined. The $50 billion Vanguard FTSE Emerging Markets ETF, the industry’s largest, has dropped 15 percent in value this year.

BRIC stocks account for 50 percent and 42 percent of assets in Vanguard’s and BlackRock’s largest emerging market ETFs, respectively, according to company websites.

State Street would be the second provider to open a non- BRIC emerging-market ETF. Emerging Global Advisors LLC in Ridgewood, New Jersey, opened the $10.2 million EGShares Beyond BRICs ETF in August 2012.

Elizabeth Bartlett, a spokeswoman for State Street, said the company wouldn’t comment on the proposed product while it’s under review by regulators.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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