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iShares Small-Cap Europe ETF Switches to MSCI Index


The iShares MSCI Europe Small-Cap ETF (IEUS) has switched to an index from MSCI as part of the ETF’s recent change in investment objective.

Last week, BlackRock (BLK), parent company of iShares, the world’s largest ETF issuer, said IEUS was shifting its focus to European small-caps after previously being known as the iShares Developed Small-Cap ex North America ETF. With the new index and focus on European small-caps, IEUS has dropped is Australian and Asian exposure, which previously accounted for a significant portion of the ETF’s weight.

The $38.3 million IEUS is now benchmarked to the MSCI Europe Small Cap Index after previously tracking the FTSE Developed Small Cap ex-North America Index. IEUS, which charges 0.4% per year, is home to 843 stocks with an almost 34.8% weight to the U.K., according to iShares data.

Germany is the ETF’s only other double-digit country weight with Switzerland, Sweden and France rounding out the top-five geographic exposures.

“We believe that the breadth and quality of our index offering, and the power of our internationally recognized brand are the key factors driving the increasing adoption of MSCI indexes by ETF providers,” said Diana Tidd, Managing Director and Head of the MSCI Index Business in the Americas, in a statement. “We are excited to further strengthen our relationship with iShares.”

While IEUS is just one ETF, its index swap is the latest win for MSCI in the ultra-competitive indexing business. In July, the company said $84 billion flowed into U.S.-listed ETFs with $29 billion, or 34%, heading into ETFs that benchmark to MSCI indices.

New ETFs backed by MSCI indices are also proving to be impressive asset gatherers. In the first half of 2014, “75 ETFs based on MSCI indexes – around one third of all equity ETFs launched, raising a total of approximately USD 1.5 billion,” according to MSCI. [New ETFs Help MSCI Lead Indexing Business]

With over 650 ETFs tracking MSCI indexes globally, more ETFs track MSCI’s indexes than those of any other index provider, said MSCI in the statement.

Four Global X ETFs – the Global X MSCI Colombia ETF (GXG) , Global X MSCI Norway ETF (NORW) , Global X MSCI Argentina ETF (ARGT) and the Global X MSCI Nigeria ETF (NGE) – have swapped to MSCI indices this year.

ETF Trends editorial team contributed to this post.

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