S&P Dow Jones Indices Introduces New EM Index

ETF Trends

S&P Dow Jones Indices, one of the largest providers of indices for exchange traded funds, introduced a new emerging markets index designed to seize the theme of rising domestic demand in developing economies.

The S&P Emerging Markets Domestic Demand Index draws from a country universe of  Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Thailand, and Turkey.

“The Index consists of the following: common stocks listed on the primary exchanges of emerging markets, ADRs listed on U.S. exchanges, and GDRs listed on European exchanges. Constituents consist of 50 emerging market securities from the consume staples, consumer discretionary, telecommunications, health care and utilities sectors,” according to a statement from S&P Dow Jones.

The statement did not mention a possible tie-up with any ETF providers, but the emerging markets consumer theme has paid dividends for some fund sponsors. For example, the EGShares Emerging Markets Consumer ETF (ECON) is Emerging Global’s largest ETF. The Global X China Consumer ETF (CHIQ) has proven successful as with almost $174 million in assets under management. [Still a Case for the Emerging Markets Consumer]

Emerging Global also sponsors a pure play on emerging markets domestic demand, the EGShares Emerging Markets Domestic Demand ETF (EMDD) . WisdomTree is a competitor in the space as well with the WisdomTree Emerging Markets Consumer Growth Fund (EMCG) , which debuted last year.

“The S&P Emerging Markets Domestic Demand Index uses a modified market capitalization weighting scheme. Index composition is reviewed annually in September. At each September rebalancing, a company in the qualifying universe is added to the Index if it meets the following requirements: float-adjusted market capitalization of at least USD $100 million as of the September rebalancing reference date, average daily turnover of at least USD $8 million for the six months prior to the September rebalancing reference date, and has traded at least 90% of the total trading days in the six months leading up to the September rebalancing reference date,” according to the statement.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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