How index and ETF innovation is delivering more focused exposure to emerging markets

Emerging markets ETFs are gaining traction with investors as providers innovate and generate new strategies for emerging markets exposure. As ETFs based on emerging markets local currency government bond indexes emerge, and others target specific themes and sectors, their increasing sophistication means it no longer makes sense to view them as a homogeneous asset class. Hannah Collins reports

Lawrence Black

Exchange-traded funds (ETFs) and emerging markets are no unlikely couple. Exposure to seemingly illiquid corners of the globe have been a hallmark of ETFs since their inception and continued innovation is driving this increasingly advanced sector. Gone are the days when ‘emerging markets' stood simply for one investment position; the ETF emerging markets universe has reached a new level of sophistication. In 2011, ETFs linked to local currency emerging markets bonds have been issued in Europe