State Street, the firm behind the two largest ETFs, announced this week the addition of two new international equity funds to its product lineup. The SPDR MSCI ACWI IMI ETF (ACIM) will offer exposure to global equity markets, casting a wide net across both developed and emerging markets. The SPDR EM 50 ETF (EMFT) will focus specifically on emerging markets, targeting 50 of the largest companies from the developing world.
Under The Hood: ACIM
This ETF makes its way into the Global Equities ETFdb Category, which is currently dominated by the Vanguard FTSE All-World ex-U.S. Index Fund (VEU) and the iShares MSCI ACWI Index Fund (ACWI). This new offering from industry giant State Street offers broad-based global equity market exposure all under one ticker. ACWI offers the deepest portfolio available on the market; this ETF is linked to an index that includes nearly 9,000 securities, putting it ahead of VXUS, which used to hold the biggest portfolio at just over 6,000 stocks [see ACIM Fact Sheet].
Although its portfolio casts a very wide net, a closer look under the hood reveals that the balance between developed and emerging markets is quite skewed. Domestic equities account for close to half of total assets while the United Kingdom, Japan, Canada, and Australia take the next biggest chunks. Emerging markets like China, South Africa, India, Mexico, Russia receive minimal allocations, giving this product a definitive tilt towards “safer”, developed markets [see Global Titans ETFdb Portfolio].
ACIM is well diversified from a sector allocation perspective; top holdings include financials (19%), information technology (12%), industrials (11%), energy (11%), and consumer discretionary (10%). This ETF features an expense ratio of 0.25%, which falls on the cheaper end of the cost spectrum when considering the global equity products space as a whole.
Under The Hood: EMFT
EMFT should have a fair amount of overlap with the PowerShares BLDRS Emerging Markets 50 ADR Index Fund (ADRE); that fund consists of about 50 ADRs from companies headquartered in emerging markets. This ETF is made up of the 50 largest stocks from the popular MSCI Emerging Markets Index, with exposure to securities from Brazil, India, Mexico, and Russia is limited to depository receipts [see BRIC-Or-Bust ETFdb Portfolio].
This ETF features a well-balanced underlying portfolio when it comes to geographic allocations. Top holdings by country include South Korea (18%), China (18%), Brazil (16%), Russia (11%), Taiwan (10%), and South Africa (9%). This fund is also well diversified from a sector breakdown perspective, with financials (23%) and energy (21%) taking the top two spots [see EMFT Fact Sheet]. EMFT further rounds out exposure to securities from the informational technology, materials, and telecommunication services sectors.
EMFT charges 0.50% in expenses, which puts it somewhere in the middle of the cost spectrum for the Emerging Markets Equities ETFdb Category.
Disclosure: No positions at time of writing.