New NETS Global Index ETF More Concentrated, Expensive Than Peers

Composition

The NETS FTSE CNBC Global 300 Index Fund ETF (MYG) was launched last week on the NYSE Arca trading platform and has thus far gathered little momentum in the way of assets or trading volume. The new fund tracks a basket of 300 global stocks calculated by FTSE and components are weighted according to their total market cap within the basket.

Most of the top holdings are American companies like Exxon Mobil (XOM) (4.18%), Proctor & Gamble (PG) (2%), and Microsoft (MSFT) (1.94%) (all data as of 11/25/08). Consumer Goods, Financials and Oil & Gas are the three top-weighted sectors, at 15.5%, 15.39% and 14.45% respectively.

Competition

The fund directly competes with iShares MSCI ACWI ETF (ACWI) and Vanguard Total World Stock Index ETF (VT), which both debuted earlier this year and have been quick to amass assets and garner respectable trading volumes. MYG is slightly pricier than ACWI and VT charging 0.43%, vs. expense ratios of 0.35% and 0.25% for ACWI and VT respectively.

In terms of what percentage U.S. equities make up, MYG seems to be the most heavily weighted to American companies. While precise data isn't yet available on the fund's official webpage, Murray Coleman of Index Universe writes that "As of early last month, that benchmark had about 50% of its constituents based in the U.S." By comparison, 47.25% of VT's market cap and just over 41% of ACWI's total cap is comprised of U.S. equities.

MYG is also more concentrated, with just 300 total holdings, versus upwards of 2,000 individual holdings for both ACWI and VT. As a result, top holding Exxon Mobil constitutes more than 4% of MYG but just 1.58% of ACWI and 1.5% of VT. Additionally, while Exxon is the only holding constituting upwards of 1% in both ACWI and VT, MYG has 22 separate holdings with overall weightings of 1% or more. This means investors can expect MYG to be much more susceptible to extreme movements within single names than its competitors, an especially important consideration in the current market environment.

Additional Reading

• More on Broad International ETFs
• MYG Prospectus [pdf file]
  
• MYG Fact Sheet [pdf file]
  
• Press Release
  
• Official Website