InvestmentsJun 23 2014

Fund review: iShares EM Consumer Growth ETF

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BlackRock has launched an exchange-traded fund (ETF) on the London Stock Exchange to give investors access to emerging market consumer equity sectors and take advantage of the growing consumption of their middle classes.

The iShares MSCI Emerging Markets Consumer Growth Ucits ETF looks to capture opportunities arising from the evolving spending patterns of consumers. The fund will invest in companies that derive either a high or growing proportion of their revenue from consumer spending. It will look at sectors such as consumer staples, healthcare, industrial, information technology and telecoms.

BlackRock believes the product provides quick and easy access to niche and broad exposures in a cost-efficient way for investors, and has launched these funds at a point of rapid growth for ETFs. This fund is designed to complement the new iShares Core MSCI Emerging Markets IMI Ucits ETF launches.

www.ishares.com/uk

MM Comment:

Much has been made of the shift the Chinese government has made in pushing the country towards being consumer-led.

This has meant that technology and consumer funds have become very expensive. If the iShares ETF offers a cost-effective way for consumers to invest in this area of growth in emerging markets such as China, then it could prove popular. A potential area of contention is that this will be the first ETF in Europe that invests exclusively in emerging markets consumer growth, which means there is a significant element of the unknown.

The top holdings reflect a play on the emerging market consumers themselves rather than consumer companies operating in emerging markets. There are, however, emerging markets companies in the mix, with Samsung in South Korea and Chinese firm Tencent completing the biggest five holdings. Information technology and consumer staples get the biggest representation,

If investors can look beyond the newness of this kind of fund, it could be a great opportunity to tap into the new-found desire for consumer products in emerging markets. The holdings have captured what all consumers around the world want, and now could be the moment the massive emerging market population is in a position to get their hands on the goods.