The appeal and demand for investments that track international markets continues to grow, leading exchange traded fund (ETF) providers to continue their innovation and introduce new products.
Internationally themed ETFs, especially those that track emerging markets, are attractive because they offer diversification, a hedge against a weak U.S. dollar, exposure to economies which are expected to grow at faster rates and the opportunity to gain greater than average returns. Although these markets can offer numerous advantages, it is equally important to keep in mind some their disadvantages, such as higher risk, political instabilities and lack of liquidity.
Despite some potential disadvantages, the family of emerging market ETFs has grown tremendously. There are over 100 different emerging market ETFs investors can choose from ranging from a broad based ETF like the heavily traded iShares MSCI Emerging Markets Fund (EEM) to one that specifically tracks a sector like the Claymore China Technology ETF (CQQQ).
To take it a step further, ETF provider Market Vectors is currently in registration with the Securities and Exchange Commission (SEC) to launch the Market Vectors Emerging Markets Local Currency Debt ETF. According to its prospectus, this ETF will utilize derivatives to reflect the performance of an index of fixed-rate sovereign debt, supranational issues and corporate bonds with at least one year of maturity. It will offer a way for investors to gain diversified exposure to emerging markets with a little less risk than a traditional equity based ETF.
In the world of country specific emerging market ETFs, ProShares is planning on widening its product offerings with the introduction of the first ever country-specific leveraged international ETFs. The ETFs include:
- Ultra MSCI Brazil
- Ultra MSCI Pacific ex-Japan
- Ultra MSCI Europe
- Ultra MSCI Mexico Investable Market
These ETFs will add to ProShares’ already established arsenal of broad based leveraged and inverse emerging market ETFs such as:
- ProShares Ultra MSCI Emerging Markets Index Fund (EET)
- ProShares UltraShort MSCI EAFE Fund (EFU)
- ProShares UltraShort MSCI Emerging Markets Fund (EEV)
- ProShares Short MSCI EAFE Fund (EFZ)
- ProShares Short MSCI Emerging Markets Fund (EUM)
