Virtus ETF Solutions, an affiliate of Virtus Investment Partners, Inc., begun trading a new Smart Beta Emerging Markets ETF, the Virtus Glovista Emerging Markets ETF (NyseArca: EMEM), on Thursday, November 09, 2017. Here is a synopsis of the new ETF:
|Symbol: ΕΜΕΜ||Exchange: NYSE ARCA|
|Name: Virtus Glovista Emerging Markets ETF||Net Expense Ratio: 0.68%|
The Virtus Glovista Emerging Markets ETF seeks investment results that correspond, before fees and expenses, to the price and yield performance of the Solactive Most Favored Emerging Market Index.
The Solactive Most Favored Emerging Market Index is based on a proprietary methodology developed by Glovista Investments LLC (Sub-Adviser), and is designed to identify securities of companies in “large liquid emerging market countries,” based on a country selection model, and provide exposure to those securities on a free-float adjusted market capitalization weighted basis. A free-float index is one that only uses freely traded shares in calculating the market capitalization weighting. Market capitalization weighting means each component security is weighted by the issuer’s market capitalization relative to the overall capitalization of the Underlying Index. The Underlying Index was co-developed by the Sub-Adviser and Solactive AG, the index provider of the Underlying Index. Solactive is not affiliated with the Fund, the Sub-Adviser, or the Fund’s investment adviser, Virtus ETF Advisers LLC (Adviser). Solactive is solely responsible for calculating, maintaining, rebalancing and reconstituting the Underlying Index. Subject to periodic review and change, Solactive currently classifies as “large liquid emerging market countries” (and the Fund therefore invests at least 80% of its assets in companies in the following 15 countries:
China, Taiwan, South Korea, India, Malaysia, Indonesia, Thailand, Philippines, Russia, South Africa, Poland, Turkey, Brazil, Mexico and Chile.
The Underlying Index utilizes 3 different selection models, each of which separately ranks top 10 large liquid emerging market countries based on the criteria of that model:
(i) macroeconomic trends,
(ii) bottom-up company-specific dynamics, and
(iii) relative price momentum dynamics.
The macroeconomic trends model analyzes risk-adjusted interest rates, yield curves, fundamental currency values, monetary liquidity, and leading economic indicators within each country. The bottom-up dynamics model analyzes company-level inputs within each country, such as net debt, total assets, and price-earnings ratios. The momentum model analyzes absolute and relative price momentum and reversal of momentum based on each country’s price index. Once each model ranks its top 10 large liquid emerging market countries, securities of companies within those countries are eligible for selection if they have free-float adjusted market capitalizations greater than $750 million and an average daily trading volume of at least $500,000 over the last three months (Selection Criteria). The Underlying Index will then include the securities of companies with the largest free-float adjusted market capitalizations from each eligible large liquid emerging market country, with not more than 50 portfolio companies from any individual country. It is possible that the Underlying Index may exclude a large liquid emerging market country if that country does not have companies that satisfy the Selection Criteria.
The Underlying Index is rebalanced and reconstituted monthly. The Underlying Index may include small capitalization companies (i.e., companies with less than $2 billion in capitalization) and medium capitalization companies (i.e., companies with between $2 billion and $6 billion in capitalization). Although the Underlying Index can include a maximum of 750 component securities, it is generally expected to include more than 400 component securities. As of September 30, 2017, the Underlying Index had 602 component securities.
FUND TOP 10 HOLDINGS (11/10/17):
|INVESCO TREASURY INSTL 1931 0.930||18.29%|
|ISHARES MSCI INDIA ETF||2.74%|
|TAIWAN SEMICONDUCTOR MANUFAC||2.44%|
|SAMSUNG ELECTRONICS CO LTD||2.23%|
|NASPERS LTD-N SHS||2.15%|
|BANK RAKYAT INDONESIA PERSER||1.74%|
|TENCENT HOLDINGS LTD||1.70%|
|SBERBANK OF RUSSIA PJSC||1.63%|
|BANCO DE CHILE||1.29%|
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Category: Equities> Emerging Equity Markets> Emerging Equity Markets Strategy
Here is a comment from William Smalley, executive managing director of Virtus ETF Solutions:
“With the launch of the Virtus Glovista Emerging Markets ETF, we can offer investors exposure to the surge in global economic growth, leveraging the specialized knowledge and quantitative analytical skills of Glovista Investments in a passive, tax-efficient vehicle. We know emerging markets can be challenging, but by systematizing Glovista’s flagship EM strategy, we believe the fund will be well positioned to mitigate the geopolitical risks and uncertainties that often come with investments in this exciting market segment.”