Update: iShares BRIC 50 UCITS ETF

Der FTSE BRIC 50 Index enthält die 50 größten Unternehmen der BRIC-Staaten. Seine Diversifikation ist eher gering, insbesondere bei der Ländergewichtung: Die größten Anteile haben China (53%) und Indien (24%). Damit ist dieser ETF eher als Emerging-Markets Beimischung geeignet.

Rolle im Portfolio

IShares FTSE BRIC 50 provides exposure to 50 of the largest companies in Brazil, India, Russia and China, collectively, known as the BRICs.

The FTSE BRIC 50 Index, the exchange-traded fund's underlying benchmark, is heavily exposed to China, which accounts for more than 60% of total portfolio composition. It is also tilted toward the financial sector, representing more than 40% of total index composition. Given its narrow concentration, this fund can be used for tactical purposes for investors with a bullish view on the BRICs, particularly China. For core holdings, investors may consider more-diversified emerging-markets ETFs.

This fund's total expense ratio of 0.74% is high compared with ETF peers. But the fund is also by far the largest in terms of assets under management and the most heavily traded on all European stock exchanges. Higher volumes often translate into tighter bid-ask spreads.

As the world’s leading provider of ETFs, iShares enjoys vast economies of scale, which can be passed on to investors in the form of lower fees. It also benefits from the cutting-edge technology and resources of its parent company, BlackRock, the world's largest asset manager.

Fundamentale Analyse

The economic global outlook is divided between improving advanced economies and contracting emerging markets. Developed countries are recovering from the financial crisis of 2008, while slumping commodity prices and headwinds from China are continuing to weaken emerging-markets growth momentum.

Rising domestic consumption will likely be a key driver of growth in the emerging markets. However, a market-cap-weighted fund may not be the best vehicle to tap into this growth trend. This fund has a large exposure to global cyclical sectors, such as financial services, energy, and basic materials.

Emerging-markets stocks, as an investable asset class, are only about 25 years old, and the growth story really took off in the early 2000s, thanks to a confluence of factors. First, the Chinese growth machine was operating at full speed. Annual gross domestic product growth rates were around 10%, thanks to economic reforms, strong export growth, and heavy investment in factories, infrastructure, and housing. Export growth was supported by low interest rates in the developed world, which drove a multiyear consumer spending boom.

The tailwinds from a decade of strong GDP growth and stellar equity market performance in emerging markets have faded. China is undergoing a transition from an investment-driven growth model to one that is more oriented toward consumer spending, and it is likely to continue to face growing pains in the medium term. Foreign fund flows have grown more volatile and have helped expose which countries have relatively weaker fundamentals, resulting in higher currency and local stock market volatility.

Almost all emerging-market countries appear to be settling into a period of slower GDP growth in the near and medium term. Part of this is because of weaker oil prices, which have hurt commodity exporting nations like Brazil and Russia. India, which accounts for approximately 14% of this fund, imports about 70% of its domestic oil needs. The slump in oil has allowed the Indian government to cut some long-standing fuel subsidies that used to weigh on the country's fiscal account. However, a rebound in the price of oil could negatively impact India's public budgets and current-account deficit.

Indexkonstruktion

The FTSE BRIC 50 Index is a free-float market-capitalisation-weighted index consisting of the 50 biggest stocks in Brazil, Russia, India, and China. Constituents are chosen from a wider universe, the FTSE Global Equity Index Series BRIC Index. They are then screened for liquidity, free float, foreign ownership, and minimum trading time. For Brazil, India, or Russia, eligible index members include depository receipts. For China, index participants include H Shares, P Chips, and Red Chips. H shares are companies incorporated in the People's Republic of China (PRC) and listed in Hong Kong. Unlike China-listed A-shares, there are no restrictions for international investors trading in H-shares. P Chips are companies incorporated outside the PRC but with at least 50% of their revenue or assets derived from mainland China. They are controlled by mainland Chinese individuals, with the establishment and origin of the company in mainland China. Red Chips are companies incorporated outside the PRC but with at least half their sales coming from mainland China and at least 30% of their shares held by mainland Chinese entities. To be included, members must trade on the New York, Hong Kong, London, or Nasdaq stock exchanges. In this way, the index aims to represent the most investable and liquid emerging-markets securities. The index is formally reviewed and rebalanced on a quarterly basis, and the weighting of any individual security is capped at 15%. Eligible constituents will first be ranked as per their respective market capitalisation with buffers applied to reduce turnover. Stocks with significant volatility will not be considered. Any ranked constituent that reaches the 40th position or higher will be included in the index but will be removed if it falls below the 61st spot. If a constituent becomes no longer legible (delisted, for example), it will be removed and the index will have fewer than 50 members until the next review. The total number of constituents is reviewed annually and may rise above 50 if the market size of BRIC equities increases. The largest index composition is allocated to China (60%-66%). India, Russia, and Brazil constitute 10% to 15% each. On a sector basis, the index is heavily tilted toward financials (40%-44%). The next largest sectors are technology (18%-23%), energy (10%-15%), and telecommunications (8%-12%). The top positions are Tencent Holdings (11%-15%), China Mobile (6%-10%), and China Construction Bank (6%-10%).

Fondskonstruktion

The iShares BRIC 50 UCITS ETF uses full replication to capture the performance of the FTSE BRIC 50 Net Total Return USD Index. The fund owns--to the extent that it's possible and efficient--all the underlying constituents in the same proportion as its benchmark. IShares engages in securities lending to enhance the fund's performance, lending up to 100% of the securities in its fund. Parent company and lending agent BlackRock covers the operational cost involved in securities lending for a 37.5% stake in the revenue generated from this activity, while the fund keeps 62.5%. Securities lending exposes the fund to counterparty risk, the possibility that the borrower will not return the securities it borrowed. To manage this risk, BlackRock takes collateral greater than the total loan value. Collateral levels vary between 102.5% and 112%. Acceptable collateral includes: equities (up to 40%), government bonds, and in some cases cash. During the past 12 months--as of Sept 30, 2015--the fund lent 10.52% of its assets under management (on average) with a maximum on-loan of 21.52% of its AUM, generating a securities-lending return of 0.06%. BlackRock also provides indemnification for its iShares ETFs. If a borrower defaults and fails to return borrowed securities, BlackRock will replace them. The indemnification agreement is subject to changes without notice.

Gebühren

The fund's total expense ratio (TER) is 0.74%, which is pricier than other alternatives offering exposure to the BRIC equity market. The annual tracking difference (fund return – index return) during the past three years for the period ended Sept. 2015 ranged from negative 0.59 to negative 0.95, suggesting that the total annual cost of holding can be higher or lower than the TER. Other costs potentially carried by the unitholder include bid-ask spreads and brokerage fees when buy and sell orders are placed for ETF shares.

Alternativen

IShares is the only provider offering an ETF tracking the FTSE BRIC 50 Index. Investors have only a few ETF alternatives offering exposure to BRIC equities, including the DJ BRIC 50 Theam Easy ETF EUR, HSBC S&P BRIC 40 ETF, and RBS Market Access DAXglobal BRIC ETF. These funds have lower expense ratios, but they are also a lot smaller in terms of net assets under management. Lower fees may potentially come at the expense of lower liquidity. As these funds are most appropriate for tactical use, investors should probably focus more on considerations such as trading costs and tracking error than annual fee differences of 10 or 15 basis points. Higher liquidity may allow ETF trades to be executed at tighter bid-ask spreads.

Über den Autor

Morningstar ETF Analysts  Alan Rambaldini is an ETF analyst with Morningstar.