Boston-based Old Mutual Global Index Trackers has launched its first ETF, listing the GlobalShares FTSE Emerging Markets Index Fund (GSR) on the NYSE Arca Exchange Tuesday. In order to compete in an increasingly crowded space, Old Mutual has thrown in an interesting twist: for a limited time, GSR will have an expense ratio of zero basis points, making it the first ETF listed under a “Zero Fee, Zero Cost” arrangement.
The ban on expenses will last until January 31, 2010, at which point GSR will cap its expense ratio at 0.39%. At this level GSR will still be cheaper than several emerging markets ETFs, such as EEM (0.72%) and GMM (0.59%), but will cost more than Vanguard’s low-cost VWO (which has an expense ratio of just 0.27%). Charles Schwab is planning to launch an emerging markets ETF in January of next year that will charge 0.35%.
GSR was seeded with more than $60 million in assets, significantly more than most ETFs maintain at launch. Most funds begin trading with between $5 million and $10 million in assets. Linked to the FTSE Emerging Markets Index, GSR has approximately 300 individual holdings, including both individual stocks and other ETFs. As of December 7, the iShares MSCI Taiwan Index Fund (EWT) and PowerShares India Portfolio (PIN) made up about 4% and 3%, respectively, of total holdings. Other major holdings include BRIC mega-caps Petroleo Brasileiro, China Construction Bank, China Mobile, and Gazprom OAO.
More To Come
Old Mutual Global Index Trackers is planning to launch up to four additional global and emerging markets ETFs in early 2010. The company is owned by Old Mutual plc, an international firm with operations in 38 countries and more than $400 billion in global assets. “GlobalShares is a new fresh brand and Old Mutual Global Index Trackers is an unfamiliar name to most U.S. investors,” said managing director and CEO Tendai Musikavanhu. “But we are confident that our tracking capabilities and our desire to hold a position as a low-cost index advisor will enable us to gain traction in this market.”
More information on the new ETF, see the GlobalShares Web site.
Disclosure: No positions at time of writing.