Emerging Global Advisors (EGA), a New York-based emerging markets specialist, has rolled out a self-indexed exchange-traded fund offering investors access to a select group of developed market companies with noteworthy exposure to emerging markets.
Marten Hoekstra, Chief Executive Officer of Emerging Global Advisors.
Listed on the NYSE Arca, the EGShares Blue Chip ETF (BCHP) is linked to the EGAI Developed Markets Blue Chip EM Access Index, an equally-weighted 30 stock index designed to capture the market performance of quality developed market companies that have measurable, meaningful and growing revenue from emerging markets.
The index, EGA’s first in-house index, consists of common stocks listed on the primary exchanges of developed markets, as well as American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) listed on US & European exchanges.
Marten Hoekstra, CEO of EGA, commented: “Development markets multinationals are often used to invest indirectly in emerging markets; however, the exposure can be limited by the quantity or quality of the companies’ emerging markets business. To allow investors to access emerging market revenue from quality multinationals, we applied our index design expertise to BCHP, rigorously screening developed market companies and selecting only those with measurable, meaningful and growing exposure to emerging markets.”
Edward Kerschner, Vice Chairman of EGA, said: “A large number of developed market companies claim emerging market aspirations, but just 24% of those companies adequately disclose what percentage of their revenue comes from emerging or frontier markets. Furthermore, of those companies that do disclose adequately, only 2% are high quality companies that have meaningful and growing emerging market revenue.”
Robert Holderith, President of EGA, added: “The fact is that some developed market companies do offer meaningful exposure to emerging market revenues—but only a select few. While research shows that only 14% of the S&P 500’s aggregate revenues come from emerging markets, companies in the EGAI Developed Markets Blue Chip EM Access Index on average earn 47% of their revenue from emerging markets.”
The fund has an expense ratio of 0.60%.