VanEck launches emerging markets ETF
VanEck has launched its first smart beta emerging markets exchange traded fund (ETF), the VanEck Vectors MSCI Multifactor Emerging Markets Equity ETF, on the Australian Securities Exchange (ASX) which will trade under the code ‘EMKT’.
The new fund, which would offer investors exposure to a portfolio of emerging markets companies, would track the MSCI Emerging Markets Diversified Multiple-Factor Index (AUD) and would screen the companies against four main factors: quality, value, momentum and low size.
VanEck’s managing director, head of Asia Pacific, Arian Neiron said: “Each of MSCI’s single factor indices for emerging markets have all outperformed the MSCI Emerging Markets Index over a 15-year period. Combining four factors in one ETF will give diversification and potential performance benefits and eliminate the need for factor timing.”
He stressed that EMKT would have low cost, transparency and liquidity benefits of an ETF while the index it would track was a “rules-based smart beta strategy that has a strong history of outperformance compared to the benchmark MSCI Emerging Markets Index”.
According to VanEck, in the long-term perspective emerging markets (EM) would offer more opportunities to investors due to the rise of the local middle-class consumer which would drive demand in education, entertainment, technology, healthcare and travel, compared to developed economies.
“Many people have invested in well-known technology companies such as Apple and Google. However, EM countries have the likes of Alibaba and Tencent, which have growth profiles for more appealing than their developed market counterparts yet many investors don’t have exposure to these companies and getting it isn’t easy,” Neiron said.
“EMKT offers greater geographic, sector and company diversification, which will help diversify local investors’ portfolios into sectors such as technology, which will account for around one quarter of the EMKT portfolio.
“This will help insulate investors against a potential slowdown in the Australian economy, which is growing below trend and well below EM growth rates,” he said.
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