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Beyond BRICs ETF Transitions to New Index


The EGShares Beyond BRICs (BBRC) completed its transition to the FTSE Beyond BRICs Index today. BBRC was previously benchmarked to the Indxx Beyond BRICs Index.

The FTSE Beyond BRICs Index generally has 75% exposure to companies in more developed emerging markets (excluding Brazil,Russia, India, China, South Korea and Taiwan) and 25% exposure to companies in frontier markets, which are less developed. While the index is free-float market capitalization-weighted, it addresses potential concentration issues by including diversification parameters such as position and country caps, as well by liquidity-ranking the frontier markets company exposure,” according to a statement issued by EGShares.

Earlier this month, BBRC pared its expense ratio to 0.58% per year, down from 0.85%. [Beyond BRIC ETF Lowers Fees]

The Beyond BRICs group includes the nations of Chile, Colombia, Czech Republic, Indonesia, Kenya, Malaysia, Mexico, Nigeria, Oman, Philippines, Poland, Qatar, South Africa, Sri Lanka, Thailand, Turkey, UAE, Vietnam, according to EGShares.

Nigeria, Qatar, United Arab Emirates and Vietnam, among others, are classified as frontier markets. At the end of September, BBRC’s top five country weights were South Africa (21.9%), Malaysia (16.1%), Mexico (15.8%), Indonesia (9.2%) and Thailand (6.6%).  At the sector level, financials and telecom names combine for over 52% of the ETF’s weight.

BBRC’s index change also means there are more than 100 North America-listed ETFs benchmarked to FTSE indices. In August, FTSE said there are 11 ETF firms in the United States and Canada offer 102 products tracking FTSE’s equity, fixed income, real estate, yield and alternative weighted indices, the benchmark provider said. Globally, FTSE-linked ETFs are offered by nine of the top ten issuers. [FTSE Hits Century Mark in North America ETF Indices]

The beyond BRICs concept has recently started gaining momentum as the largest emerging markets have been disappointments for much of 2013. As data from EGShares indicate, a beyond BRIC basket has been less volatile than traditional emerging markets index with a higher Sharpe ratio over the past five years.

Chart Courtesy: EGShares