BLDRs EM vs MSCI EM

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peteyperson
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BLDRs EM vs MSCI EM

Post by peteyperson »

The seven-month-old BLDRS Emerging Markets 50 ADR Index
Fund is designed around the concept of reassuring investors
who want international exposure but may be wary of non-US
equities.

Nasdaq Financial Products Services Inc launched the fund
with Bank of New York as trustee in November 2002 along with
three other BLDRS, pronounced "builders"￾ and named for
"Baskets of Listed Depositary Receipts."￾ BLDRS Emerging
Markets, Asia 50 ADR Index Fund, Europe 100 ADR Index Fund
and Developed Markets 100 ADR Index Fund are based on
indices created in 1998.

The BLDRS funds, listed on Nasdaq, are the only exchangetraded
funds that track indices of American Depositary
Receipts. Bank of New York is the largest depositary bank for
ADRs, with 66% of all sponsored depositary receipt programs
not traded over the counter, and more than 1,400 programs
representing 70 countries.

The impetus for creating the BLDRS was to provide a transparent
vehicle for non-US exposure with a low expense ratio,
says Laura Melman, vice president of product management
for BoNY's depositary receipt division. BLDRS Emerging
Markets has an expense ratio of 0.3%, much lower than the
management fee for an actively managed mutual fund of non-
US stocks, she says. Other international ETF fees hover around
0.8%. As an ETF, the BLDRS product also offers more liquidity
than a non-exchange-traded fund.

When BLDRS Emerging Markets launched, it was the only ETF
to offer emerging markets exposure. Barclays Global Investors
rolled out the second such fund on April 11 on the American
Stock Exchange: iShares MSCI Emerging Markets Index Fund.
Because the BLDRS Emerging Markets offers international exposure
and the benefits of ADRs, the product "fills a niche, and it
makes folks a little more comfortable,"￾ says Melman.

<snip>

Much cheaper than the 0.75 EM ETF equivalent Stateside. Never heard anyone mention this one. Usually EEM instead.

http://exchangetradedfunds.com/ETFR/etfr33.pdf

Petey
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ben
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Post by ben »

BLDRS is a good way to go EM in my opinion. Negatives are several though: the HLDRS can only contain companys listed in the US as ADRs, so much less diversified.

EM companies with ADRs are typically the biggest of the biggest - I.e. extreme(EM standard) large cap (growth often).

The ADRs have a tendency to trade more connected with USA total market sentiment than the underlying company. ("argh..! markets dropping - I am selling ALL!")

One other point I read was that the first thing an American offloads when overall markets go down is the foreign part - not sure if valid though.

Believe volume is still fairly low - so bid/offer spread high.

Positive is naturally that to be listed as ADR you need to comply with several rules/regulations.

Thank God for my Vanguard VEIEX.... But would go EEM should I one day be forced to go all ETF route (unless Vanguard comes out with the long awaited EM ETF - and where is GLD the new gold ETF??? I feel another gold conspiracy theory coming on...). 8)
Normal; to put on clothes bought for work, go to work in car bought to get to work needed to pay for the clothes, the car and the home left empty all day in order to afford to live in it...
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ataloss
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Post by ataloss »

FRom the 7/31 press release...
VIPER Shares on Nine Existing Funds

Vanguard will also issue exchange traded VIPER Shares for nine existing index funds:

Vanguard® Value Index Fund
Vanguard® Growth Index Fund
Vanguard® Mid-Cap Index Fund
Vanguard® Small-Cap Index Fund
Vanguard® Small-Cap Value Index Fund
Vanguard® Small-Cap Growth Index Fund
Vanguard® European Stock Index Fund
Vanguard® Pacific Stock Index Fund
Vanguard® Emerging Markets Stock Index Fund

Vanguard, the leading provider of indexed mutual funds, began offering VIPER Shares of Vanguard® Total Stock Market Index Fund in May 2001 and Vanguard® Extended Market Index Fund in January 2002, and currently manages $2 billion in those two VIPERs. With the addition of the 20 new VIPERs announced today, Vanguard will have 22 funds offering exchange-traded shares covering major market segments.

Vanguard expects to launch the new funds and VIPER Shares this autumn. At that time Vanguard will make available more information about the new funds and VIPERs, including expense ratios.
Have fun.

Ataloss
peteyperson
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Joined: Tue Nov 26, 2002 6:46 am

Post by peteyperson »

Yes, I am looking forward to seeing what expense ratios they come up with in relation to Pacific and EM. I understand the their EM is not an exact match to the free index and excludes Russia which I would like included in my EM portfolio.

The small-cap style split is getting rather crowded now with the S&P and Russell versions already.

Petey
ataloss wrote: From the 7/31 press release...
VIPER Shares on Nine Existing Funds

Vanguard will also issue exchange traded VIPER Shares for nine existing index funds:

Vanguard® Value Index Fund
Vanguard® Growth Index Fund
Vanguard® Mid-Cap Index Fund
Vanguard® Small-Cap Index Fund
Vanguard® Small-Cap Value Index Fund
Vanguard® Small-Cap Growth Index Fund
Vanguard® European Stock Index Fund
Vanguard® Pacific Stock Index Fund
Vanguard® Emerging Markets Stock Index Fund

Vanguard, the leading provider of indexed mutual funds, began offering VIPER Shares of Vanguard® Total Stock Market Index Fund in May 2001 and Vanguard® Extended Market Index Fund in January 2002, and currently manages $2 billion in those two VIPERs. With the addition of the 20 new VIPERs announced today, Vanguard will have 22 funds offering exchange-traded shares covering major market segments.

Vanguard expects to launch the new funds and VIPER Shares this autumn. At that time Vanguard will make available more information about the new funds and VIPERs, including expense ratios.
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