BlackRock, the company behind iShares, has launched three new developed-market equity ETFs on the NYSE Arca. The ETFs are the iShares MSCI World Index ETF (URTH), iShares MSCI Hong Kong Small Cap Index ETF (EWHS) and iShares MSCI Singapore Small Cap Index ETF (EWSS).
iShares has launched three new ETFs, including two small-cap funds tracking Singapore and Hong Kong.
The iShares MSCI World Index ETF responds to client interest in a global developed equities “pure play” without emerging markets exposure, while the Hong Kong Small Cap and Singapore Small Cap ETFs offer access to smaller developed markets, according to Darek Wojnar, Head of US iShares Product Development and Management at BlackRock.
“Investors increasingly want to customise their global equity exposure by dialing up or down certain countries and market caps,” Wojnar said. “We will continue to expand our robust product line-up to support the growing number of investors seeking to build portfolios very closely suited to their specific needs.”
The iShares MSCI World Index ETF is physically replicated and includes 1,489 stocks from 24 key developed countries around the world. The fund tracks the popular MSCI World index which is used as a benchmark by many global equity fund managers.
With the US, UK, Japan and Canada the four largest weights in this fund, representing almost 77%, investors may be attracted to the fund thanks to its limited amount of direct eurozone exposure.
The new iShares MSCI Hong Kong Small Cap and iShares MSCI Singapore Small Cap ETFs can be appropriate for investors looking for developed markets that potentially offer stronger relative growth.
These two funds follow a recent research paper by Russ Koesterich, iShares Global Chief Investment Strategist, who suggests that investors should look to smaller developed markets such as Canada, Australia, Singapore, Switzerland, and Hong Kong (the so-called “CASSH” countries).
In the paper, Koesterich argues that many smaller, developed countries, such as Singapore and Hong Kong, are less burdened by debt and structural deficits and enjoy better growth prospects.
Better growth has historically correlated strongly with faster earnings growth, which in turn is the ultimate driver of stock market returns.
Moreover, says Koesterich, the ‘CASSH’ countries also contain corporate sectors that are, on average, at least as profitable as those in the United States, Europe, and Japan, and are more than capable of competing on a global stage.
The MSCI World fund has an expense ratio of 0.24%, while the MSCI Singapore and Hong Kong small cap funds both have expense ratios of 0.59%. All three of the funds are market cap weighted.