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Wednesday, February 17, 2010

EGA Launches First of Many BRIC ETFs

News summary by MFWire's editors

Emerging Global Shares Trust, a newcomer bursting into the exchange-traded fund (ETF) game, launched its newest fund Wednesday. The China Infrastructure Index Exchange-Traded Fund invest solely in China by tracking the performance of the INDXX China Infrastructure Index and investing in the 30 largest publicly traded companies in the Chinese infrastructure industry.

The fund comes with an expense ratio of 85 basis points. It is managed by Alps Advisors and sub-advised by Emerging Global Advisors. Richard Kang, CIO of EGA, is the lead portfolio manager, according to the SEC filing.

As reported by The MFWire in November, EGA filed for the approval of seven BRIC (Brazil Russia India China) ETFs, including the now-launched China fund.

Expect more ETFs, such as the INDXX India Infrastructure Index Fund, INDXX Brazil Infrastructure Index Fund, INDXX India Mid Cap Index Fund, INDXX China Mid Cap Index Fund, INDXX Brazil Mid Cap Index Fund, and the INDXX Growing Asia Large Cap Index Fund to launch in quick succession.

EGA debuted its first ETF in May, 2009. It has launched four more since and plans to have at least ten available within a year.

Company Press Release

NEW YORK, February 17, 2010 – Emerging Global Shares (EG Shares), the first dedicated emerging markets sector ETF provider, today launched the China Infrastructure Index Exchange-Traded Fund (NYSE: CHXX), the first ETF focused solely on the infrastructure sector in China. The Fund invests in 30 of the largest publicly traded companies dedicated to the infrastructure industry in that country, and is designed to track the performance of the INDXX China Infrastructure Index.

“China has made enormous progress in their infrastructure development, but the country still has literally decades of infrastructure build-outs and ongoing maintenance ahead of them to keep pace with their economic and population expansion,” said Robert Holderith, President and CEO of EG Shares. “That, combined with research which shows that emerging markets should provide about 80 percent of the entire world’s growth over the next 10 years, makes the China Infrastructure ETF launch timely.”

The China Infrastructure Index has an average market capitalization of $8.3 billion and the Fund charges a net expense ratio of 0.85%* (gross expense ratio: 1.10%). The top five industry weightings of the Index, as of 2/1/10, are Real Estate Management & Development (22.75%), Metals & Mining (15.22%) Construction & Engineering (14.93%), Electrical Equipment (11.70%) and Construction Materials (9.37%), followed by Diversified Telecommunication, Independent Power Producers, Machinery, Transportation Infrastructure, and Energy Equipment & Services.

According to Richard Kang, CIO and Director of Research at Emerging Global Advisors, investing in emerging markets and infrastructure go hand in hand. “It’s important to understand that what we take for granted in the developed world is currently in high demand in emerging economies. Many of the most basic essential services that are vital to developed markets are still in the early stages in emerging markets, all of which contributes to a growing global infrastructure market that is roughly $20 trillion worldwide.”

The Emerging Global Shares China Infrastructure Index Fund is the fifth ETF to be introduced by Emerging Global Shares. Other funds include the Emerging Global Shares Emerging Markets Metals & Mining Fund (EMT), Emerging Global Shares Emerging Markets Energy Fund (EEO), Emerging Global Shares Emerging Markets Financials Fund (EFN) and the Emerging Global Shares Emerging Markets Titans Composite Index Fund (EEG). 

Edited by: Daniel Tovrov

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