Products May 21, 2009

Firm Releases Emerging Market ETFs

Emerging Global Advisors, LLC, has introduced an emerging market sector family of exchange-traded funds (ETFs).
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According to a news release, the Emerging Global Shares (EGS) family of ETFs is based on the Dow Jones Emerging Markets Sector Titans Indexes and is designed to provide institutional investors with exposure to leading emerging market companies across multiple industry sectors.

The news release said the initial funds will focus on Energy and Metals & Mining. All the ETFs will be listed on the NYSE Arca electronic exchange.

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“Our family of ETFs will provide the market access and liquidity to allow institutions to execute trading and investment strategies that have not been previously possible,” said Robert Holderith, chief executive officer at Emerging Global Advisors, in the release.

The initial group of ETFs includes:

  • The EGS Emerging Markets Energy Fund, which seeks to track, before fees and expenses, the performance of the Dow Jones Emerging Markets Oil & Gas Titans 30 Index. The Dow Jones Index includes 30 of the largest emerging markets companies in the oil & gas industry across 13 countries.
  • The EGS Emerging Markets Metals & Mining Fund is designed to track, before fees and expenses, the performance of the Dow Jones Emerging Markets Metals & Mining Titans 30 Index. The Dow Jones Index includes 30 of the largest emerging market companies in the metals and mining sectors across nine countries.

Each ETF has exposure to a diversified mix of countries reducing single-country economic and political risk, an important concern for many emerging markets investors, Emerging Global Advisors said. Components of the underlying indexes have been selected by Dow Jones Indexes based on float-adjusted market capitalization, revenue, and net profits.

The company plans to introduce a total of 10 sector-based emerging markets ETFs based on the modified market cap Dow Jones indexes, as well as products built on a Basic Resources index, and additional composites of multiple indexes.

“Current ETF offerings generally limit investors to country or regional exposure, or require a more general investment in emerging markets,” said Holderith. “We think there will be considerable interest in a family of products that provides diversified emerging market sector exposure in a highly transparent, highly liquid ETF format.”

Compliance May 21, 2009

EBSA Again Extends Effective Date of Advice Rule

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) said the final rule about investment advice under the Pension Protection Act will be extended to November 18.
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On January 21 the DoL published a final rule governing the provision of investment advice under the Employee Retirement Income Security Act’s prohibited transaction provisions (see “DoL Finalizes Investment Advice Rule’). Then the DoL extended the applicability and effective dates of the final regulation from March 23 to May 22 and invited public comments on the rule (see “DoL Suggests Advice Rule Delay“).

In a press release, the EBSA said it has since determined that additional time is necessary to consider the legal and policy issues raised by comments (see “Controversy Brews over Investment Advice Regs’).

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The notice extending the effective date is expected to be published in the May 22 edition of the Federal Register.

Meanwhile, a proposed bill in Congress also addresses investment advice. Congressman Rob Andrews (D-New Jersey) last month introduced the Conflicted Investment Advice Prohibition Act of 2009, which essentially counters the DoL’s investment advice regulations (see “Andrews Introduces Advice Legislation’). Andrews has been an outspoken critic of those regulations, specifically the class exemption (see “Andrews Legislation Raises Questions’).

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