Thu, Oct


Solactive announces the launch of the Solactive Most Favored Nations Emerging Markets Index, underlying the newly launched Virtus Glovista Emerging Market ETF ....

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Timo Pfeiffer, Head of Research at Solactive AG

EMEM US will begin trading today on the NYSE. EMEM will be the first Emerging Markets ETF in the U.S. providing diversified exposure to a set of most favored Emerging Markets countries according to Glovista’s proprietary global macro country selection methodology.

Solactive developed the index based on standard liquidity criteria, as well as global macro, quantitative and technical models provided by Glovista. Specifically, the Solactive Most Favored Nations Emerging Markets Index represents the aggregation of multiple models that capture macroeconomic trends (50% weight), bottom-up company-specific dynamics (30% weight) and relative price momentum dynamics (20% weight). Each country in the Index is represented by, at most, the 50 largest stocks within said country.

As the Index restricts maximum single country allocations to 10% of the overall portfolio, EMEM provides exposure to Emerging Markets, unconstrained from the requirements of traditional Emerging Markets Funds whose mandates are tied to market-capitalization weighted benchmarks. Such benchmark constraints entail constant large exposure levels to China, South Korea and Taiwan.

Timo Pfeiffer, Head of Research at Solactive AG, commented: “The Solactive Most Favored Nations Emerging Markets Index allows investors to gain access to Emerging Markets that present favorable economic data based on Glovista’s systematic model of country selection. By assessing macro- and micro-economic performance, the model assigns weight to each country’s basket of stocks, overweighting those countries that exhibit a superior economic outlook.”

Darshan Bhatt, Deputy CIO of Glovista Investments, said: “We believe this fund provides a uniquely powerful vehicle to gain exposure to Emerging Market Equities as the approach seeks to capitalize on the large dispersion of returns across EM countries, unconstrained by the narrow set of countries that dominate market capitalization weighted benchmarks, including China, South Korea and Taiwan.”

The Solactive Most Favored Nations Emerging Market Index is calculated as net total return and price return and is denominated in USD. Components are rebalanced monthly. As of November 8, the most represented countries in the Index were Russia, Thailand and Indonesia with a composite weight of 25.56%.