Newer, Cheaper Emerging Market Funds Attracting Increasing Capital

In Friday’s column, we pointed out the continued impressive growth of IEMG (iShares Core MSCI Emerging Markets, Expense Ratio 0.14%), a fund that debuted in October of 2012 from iShares in order to deliver more “optimized” access to a well-known and benchmarked MSCI Index.

Similarly, IEFA (iShares Core MSCI EAFE, Expense Ratio 0.08%) has seen a similar effect, and like IEMG, year-to-date inflows are evidence that institutional and perhaps retail investors are embracing this fund as a cheaper alternative to the more tenured EFA (iShares MSCI EAFE, Expense Ratio 0.34%, $67.6 billion in AUM).

IEFA has seen an impressive $3.9 billion enter the fund just through the first three trading months of 2017, building its asset base up to $21.2 billion and placing it at number three in the “EAFE” category behind the $47.6 billion VEA (Vanguard FTSE Developed Markets, Expense Ratio 0.09%) and its cousin EFA which is the largest fund in the category.

Like IEMG, IEFA has more individual holdings than its cousin EFA, with two thousand five hundred thirty-five individual names when compared to EFA’s nine hundred fifty-five. Like IEMG we see extensive exposure to ordinary shares with top end country exposure as follows: 1) Japan (24.22%), 2) U.K. (17.65%), 3) France (9.28%), 4) Germany (8.94%), and 5) Switzerland (8.12%). Top individual weightings are: 1) Nestle SA (1.56%), 2) Roche Holding Par AG (1.17%), 3) Novartis AG (1.08%), 4) HSBC Holdings PLC (1.05%), and 5) Toyota Motor Corp (0.93%).

The iShares Core MSCI EAFE ETF (NYSE:IEFA) was trading at $57.65 per share on Monday morning, down $0.3 (-0.52%). Year-to-date, IEFA has gained 7.50%, versus a 4.94% rise in the benchmark S&P 500 index during the same period.

IEFA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #2 of 50 ETFs in the Foreign Large Cap Blend ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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