New From iShares: Ireland ETF, Indonesia ETF

by on May 7, 2010 | ETFs Mentioned:

The latest ETF figures show that iShares still has a solid grip on the top spot on the totem pole, but that hasn’t stopped the industry leader from rolling out new products in an attempt to increase its market share. The latest additions to the iShares product line were rolled out on Friday, including a new twist on all-cap investing, a second try at a fund focusing on the Emerald Isle, and another ETF focusing on the world’s fourth largest country. The new ETFs are:

  • MSCI USA Index Fund (EUSA)
  • MSCI Ireland Capped Investable Market Index Fund (EIRL)
  • MSCI Indonesia Investable Market Index Fund (EIDO)

The MSCI USA Index Fund will seek to replicate the performance of the MSCI USA Index, a benchmark designed to measure the performance of equity securities in the top 85% by market capitalization of equity securities listed in the U.S. The index underlying EUSA consists of about 600 individual securities (view the EUSA fact sheet).

Ireland ETF, Part Deux

EIRL will be the only U.S.-listed ETF offering exposure to the Irish economy, although it won’t be the first to do so. In June 2008, Northern Trust launched the NETS ISEQ 20 Index Fund (IQE), an ETF that held the largest stocks traded on the Irish Stock Exchange. IQE never really took off, but it also never really had a chance to gain any traction. Northern Trust pulled out of the ETF industry less than a year after it entered, a move that made little sense at the time and even less in hindsight (see ETF Hall of Shame: Nine Exchange Traded Debacles).

EIRL is linked to the MSCI Ireland Investable Market 25/50 Index, a benchmark that is designed to measure the performance of stocks in the top 99% by market capitalization of equity securities listed on stock exchanges in Ireland. At the end of the first quarter, the index consisted of just 21 securities, with large allocations to the materials (25%), consumer staples (23%), and industrials (18%) sectors. EIRL’s largest holding is CRH PLC, an Irish building materials group that accounts for about 22% of the underlying index. Other big components include food company Kerry Group (11%) and drug development firm Elan Corporation (9%). EIRL will charge an expense ratio of 0.55%, on par with the average within the Europe Equities ETFdb Category.

With the launch of EIRL, we can check another idea off our list of Ten ETFs That Don’t Exist But Should.

Indonesia ETF: Showdown With Van Eck

The third new ETF from iShares, EIDO, will track the MSCI Indonesia Investable Market Index, a benchmark that includes about 46 Indonesian equities representing 99% of the market capitalization in the emerging economy. Currently, the Market Vectors Indonesia ETF (IDX) is the only ETF offering a pure play on the Indonesian stock market.

Indonesia has been home to one of the world’s best performing equity markets during the recovery, with a prolonged period of relative political stability helping to boost the markets in the world’s fourth most populous country (see Indonesia ETF Surges Ahead). Similar to IDX, the new Indonesia ETF from iShares will have a tilt towards the financial and industrial sectors. EIDO will charge an expense ratio of 0.65%, slightly below the 0.68% charged by IDX.

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Disclosure: No positions at time of writing.