Van Eck responds to popularity of small-caps in Brazil with a wider net of Latin American stocks while First Trust creates the BICK, an emerging markets play swapping Korea for Russia.
First, the innovative Van Eck family of ETFs has introduced a Latin America Small-Cap ETF ( LATM – news – people ) to build on its popular Brazil Small-Cap ETF ( BRF – news – people ).
Brazil dominates LATM with 43% of the basket, followed by Mexico at 23% and Canada at 19%. The small-caps in this new basket remind me of what a small-cap represented when I started in this business with Robert W. Baird: with a market cap of at least $150 million and meet certain liquidity requirements. Coupling LATM with large cap regional ILF could be a powerful double-barreled shotgun aimed at Latin American growth.
Next comes a First Trust spin on the BRIC concept by throwing out Russia and replacing it with South Korea (NYSE: EWY) one of my favorite emerging market holdings. The First Trust BICK Index Fund (NASDAQ: BICK) began trading this week.
To some, adding South Korea will seem odd since it is now leading the group of 20 and has a per capita far higher than India, China and Brazil. In fact South Korea has a GDP roughly equal to that of India though its population is about 5% of India. South Korea’s future is closely tied to growing with these countries and adding it into this grouping should add balance and lower volatility and risk. Another aspect I like is that each country receives an equal 25% allocation in the index, consisting of up to 25 stocks, which are also equally weighted. It would be better to have more of a concentrated approach with a total of 40 stocks.
Currently, BICK has 87 holdings, and the top 10 holdings all have weightings of more than 2%. The largest sectors are: Financials 24.8%, Technology 22.1%, Materials 13.4%, Industrials 9.6% and Telecommunications 8.5%. The top holdings, all from India, are Icici Bank ( IBN – news – people ), Satyam Computer Services ( SAY – news – people ), Tata Motors ( TTM – news – people ), Patni Computer Systems ( PTI – news – people ), and Infosys Technologies ( INFY – news – people ). The new ETF will have an expense ratio of 0.70%.
More information can be found at the First Trust homepage contains links to the BICK fact sheet and the Investor Guide.
Finally, Schwab’s eight low-fee ETFs have reached cumulative assets of $1 billion: –Schwab U.S. Broad Stock Market (SCHB), 0.08% expense ratio:
–Schwab U.S. Large-Cap (SCHX), 0.08% expense ratio
–Schwab U.S. Small-Cap (SCHA), 0.15% expense ratio
–Schwab International Equity (SCHF), 0.15% expense ratio
–Schwab U.S. Large-Cap Growth (SCHG), 0.15% expense ratio
–Schwab U.S. Large-Cap Value (SCHV), 0.15% expense ratio –Schwab International Small-Cap Equity (SCHC), 0.35% expense ratio –Schwab Emerging Markets Equity (SCHE), 0.35% expense ratio
Carl T. Delfeld is the publisher and author of “Around the World with ChartwellETF.com,” a weekly newsletter focused on using ETFs (Exchange-traded Funds) to take advantage of the investment opportunities offered by Global and Emerging Markets and providing recommendation for building a global investment portfolio. Visit http://www.chartwelladvisor.com to view recent featured articles and investment advice.