BlackRock has expanded its suite of emerging markets exchange-traded funds with the launch of the iShares MSCI Emerging Markets Horizon ETF (EMHZ).
The new fund provides exposure to large- and mid-cap stocks in the smallest emerging markets countries such as Mexico, Malaysia, Indonesia and Thailand.
EMHZ joins over 40 iShares emerging markets ETFs that offer broad to precise exposures, from the iShares Core MSCI Emerging Markets ETF (IEMG) to the iShares MSCI Colombia Capped ETF (ICOL).
As investors wade back into emerging markets, many are taking a two-pronged approach — investing in a broad emerging markets fund and then adding selective exposures in single and/or smaller regional emerging markets countries to capture growth potential and further diversification. In Q3 2014, investors allocated USD9.4 billion to emerging markets equities. Just over half of the emerging markets flows were invested into more selective exposures, indicating that investors are differentiating across regions.
Patrick Dunne, head of iShares global markets and investments at BlackRock, says: “Many investors realise they need exposure beyond BRICS (Brazil, Russia, India and China) and other large countries like South Korea, Taiwan and South Africa that dominate broad emerging markets funds. The new iShares MSCI Emerging Markets Horizon ETF offers single trade access to 16 of the smallest emerging markets countries to help investors who want precise emerging markets exposure and portfolio diversification.”
The MSCI EM Horizon Index – which is part of the emerging markets family of indexes – is designed to reflect the performance of a selection of the smallest emerging markets countries by targeting the smallest 25 per cent of the MSCI Emerging Markets Index by market capitalisation and then excluding Brazil, China, India and Russia. The top ten countries in the index include: Mexico, Malaysia, Indonesia, Thailand, Turkey, Poland, Chile, Colombia, Philippines, and Greece.