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

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. and BlackRock 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U.S.-based emerging-market ETFs have lost $20.7 billion, or about 17 percent of assets, this year as investors have withdrawn from funds and the value of their holdings has declined.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.

(Bloomberg News)


What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video


Top questions surrounding future of DOL fiduciary rule

Reporter Greg Iacurci and managing editor Christina Nelson discuss the biggest uncertainties springing from the Fifth Circuit Court of Appeals' decision to vacate the regulation.

Latest news & opinion

What to watch for next with the DOL fiduciary rule

Much hinges on whether the Labor Department appeals the 5th Circuit decision by April 30.

Social Security benefits losing buying power

Low inflation combined with rising Medicare costs threaten the adequacy of seniors' income.

Finra looks to streamline broker-dealer exams

CEO Robert Cook says three examination teams may be consolidated.

The 401(k) robo-revolution is here

Could human advisers be displaced as digital-advice firms use technology to deliver services to plan sponsors and participants?

SEC forging ahead on fiduciary rule despite DOL rule decision in 5th Circuit

Chairman Jay Clayton says 'the sooner the better' when asked when an SEC fiduciary rule will be ready.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print