db x-trackers MSCI Emerging Markets TRN Index UCITS ETF

Das Wachstum der Wirtschaft der Schwellenländer ist überdurchschnittlich, die Performance der Aktienmärkte nicht. Nachholbedarf kontra Unsicherheit.

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The fund provides exposure to a wide array of mid- and large-cap companies within the world’s emerging regions. This broad category of countries has seen its position on the global stage rise significantly in recent years. Whereas this type of exposure would once have been considered a speculative tactical tool, it is increasingly becoming a core component of a globally balanced portfolio.

Nevertheless, this can be a volatile area of the market. For example, the MSCI Emerging Markets Index has had an annualised standard deviation of 18.5% for the past 10 years, versus 14.1% for the MSCI World. However, correlation metrics to developed equity exposures suggest its benefit as a diversifier has increased of late. Indeed, over the same 10-year period it showed a correlation to the local-currency returns of the S&P 500, the MSCI Europe, and the broader MSCI World Index of 77%, 80% and 83%, respectively. Meanwhile, one-year correlations have dropped to 47%, 75% and 63%.

The fund does not distribute dividends; therefore it may not suit an investor looking for regular investment income. European investors should note that the fund is USD-denominated, so its performance may be affected by foreign-exchange valuations.

Fundamentale Analyse

While economic growth in the developed world remains lacklustre despite rock-bottom interest rates, much of the developing world has maintained strong growth rates over the last few years. As the group’s largest economy-- and the largest weighting in the index--China has a considerable impact on the MSCI Emerging Markets Index. China’s GDP grew by 7.7% in 2013, matching 2012’s performance. Though still robust, it is less than had become customary. At the 2013 Plenum, the Chinese Communist Party’s economic planning meeting held every five years, President Xi Jinping hinted at plans to allow for greater market-driven growth. Already, the People’s Bank of China announced banks could set prime lending rates, and the government launched the Shanghai Pilot Free Trade Zone which will offer full currency convertibility of the Renminbi. The move highlights the gradual liberalisation of China’s monetary and economic policy, but China’s leadership has asserted it remains in control of the reforms. Even so, China has found itself tied up in ongoing territorial disputes, with Japan--China’s second largest trading partner. International concern overethnic tensions and violent clashes in Uighur-dominated Xinjiang Province remains another sore point, with potential to disrupt regional economic expansion and discourage foreign investment.

South Korea’s economy has grown dramatically in the past few decades. Although still classified as an emerging market by MSCI, many consider South Korea a developed country. Much of the private sector growth has been driven by large conglomerates--such as Samsung, LG and Hyundai--but corporate governance concerns have dogged them as a result of their family-run structure. South Korea’s growth depends heavily on China, its largest market for exports.

Taiwan is also dependent on China as a trading partner. Its export-driven economy has expanded considerably in the last few decades but its recent growth has not been as robust as some of its neighbours'. Its GDP only grew 1.7% in 2013 but is forecasted by the Taiwanese government to reach 2.5% in 2014.

Thanks to a wealth of natural resources, Brazil benefited from the rise in commodity prices over the last decade and the growth of raw material exports toChina. With China’s own exportsslowing, however, the demand for raw materials could drop considerably. Further muddying the picture is the extensive shale gas discoveries in the U.S. Politically, Brazil is in flux. Widespread protests in the summer of 2013 over the cost of public transit showcased the country’s growing social unrest and public dissatisfaction with ineffective government spending.

Indeed, Brazil’s growth has slowed. From its record setting 7.5% in 2010, GDP growth tumbled to 0.9% in 2012 before recovering to 2.2% in the third quarter of 2013. The 2014 FIFA World Cup and 2016 Olympic Games have become major costs to the government, but which President Rousseff has justified through forecasted job creation and infrastructure development.

Over the last ten years, the MSCI Emerging Markets Index had an annualised return of 12.41% versus 7.38% for the MSCI World Index, which covers only developed market equities. Its price-to-earnings ratio was 12.1 at the end of December, up from its low of 7.1 in May 2009.


The MSCI Emerging Markets Index is a free float market capitalisation-weighted index covering 21 emerging market countries from all over the world. It currently has 822 large- and mid-cap constituents and covers approximately 85% of the free float-adjusted market capitalisation of the component countries. The index is reviewed quarterly, with size cut-offs recalculated semi-annually. The universe is initially screened for liquidity, as measured by the value and frequency of trading. The median constituent has a market capitalisation of $2.3 billion. At the end of April, the top geographic exposures were China, South Korea, and Brazil, with respective weights of 18.2%, 14.4%, and 12.7%, followed by Taiwan at 11.2% and South Africa at 7.0%. On a sector basis the top weight is financials, making up 27.9% of the total, followed by information technology at 14.2%, energy at 11.8%, materials at 10.3%, and consumer staples at 9.3%. The index is not very concentrated, with just 16.1% in the top 10 names. The top individual security is Samsung Electronics Co., at a 4.0% weight.


The fund employs synthetic replication to provide exposure to the underlying benchmark, entering a funded swap with parent company Deutsche Bank. Investors’ cash is transferred to Deutsche Bank, which then puts collateral in a segregated account opened in the name of Deutsche Bank and pledged to the fund. The collateral is marked to market daily and its composition can change every day. Under the terms of the swap, the counterparty agrees to provide the fund with exposure to the total return of the underlying index, net of any associated taxes, costs or fees. The return from the swap assumes that all dividends paid by the underlying stocks are reinvested in the index. This fund does not pay out any dividend distributions. At the time of writing the fund had assets of roughly $3.1 billion. At the time of writing, the collateral consists mainly of U.S., European, and Japanese equities from a variety of industries, as well as roughly 10% corporate and government bonds. The fund’s prospectus states that, in compliance with UCITS III rules, it cannot have net counterparty exposure exceeding 10% of the fund’s NAV, implying that the collateral must at a minimum be valued at 90% of the fund’s net assets. Collateral will be held and managed by the custodian Bank of New York Mellon (Luxembourg). In the case of an enforcement event—which could be any of a number of a wide range of actual and/or potential default or termination events on the part of Deutsche Bank—the fund will be entitled by Luxembourg law at that time to enforce the pledge and sell the collateral assets without giving prior notice to Deutsche Bank.


The fund’s total expense ratio (TER) is 0.65%, which is typical in relation to other funds that provide similar exposure. Other costs potentially borne by the unitholder but not included in the TER include swap fees, and bid-ask spreads and brokerage fees when buy and sell orders are placed for ETF shares.


In Europe, many providers offer ETFs tracking the MSCI Emerging Markets Index, including UBS, Amundi, SPDR, ComStage, Lyxor, iShares, Source, and HSBC. Vanguard FTSE Emerging Markets ETF follows a different benchmark but provides a similar exposure. Alternatives to market capitalisation-weighted exposures include the Ossiam ETF Emerging Markets Minimum Variance and PowerShares FTSE RAFI Emerging Markets ETF.

Of all of these, the largest is the iShares ETF, which uses physical replication with sampling. It has $6.9 billion in assets and a TER of 0.65%. The Amundi, Vanguard and Source products have the lowest TER at 0.45%.

In Asia, the only direct alternative to this ETF is the Lyxor ETF MSCI Emerging Markets (H1N, listed in Singapore, TER of 0.65%).

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Über den Autor

Morningstar ETF Analysts  research hundreds of ETFs available to European investors. The Morningstar Rating for ETFs is based on a risk-adjusted performance measure