iShares: Small-Cap ETF Exposure to Brazil, China

Includes: ECNS, EWZS, GFA, HAO
by: Emerging Money

As the push into emerging markets broadens beyond the gigantic exporters into the domestic economies of Brazil, Russia, India and China, the ETF industry is catching up. The latest entrants in the space include the iShares small-cap Brazil (NYSEARCA:EWZS) and China (NYSEARCA:ECNS) funds, both of which launched Friday to reflect the performance of MSCI indices.

On the Brazil side, EWZS looks a lot like the existing small-cap ETF (NYSEARCA:BRF) from Van Eck. Most of the core holdings are the same -- companies like Totvs and Diagnosticos da America -- with only a few exceptions. EWZS, for example, does not allocate a large part of its assets to Gafisa (NYSE:GFA), which is BRF's top holding.

Given the slight tweaks in index weighting, the two funds may well end up performing differently, but the strong overlap in the actual holdings argues against holding both. On the other hand, the new China small-cap fund ECNS has a fairly similar sector allocation to the existing HAO -- the main difference is that HAO is still industry-heavy while ECNS focuses more on consumer shares -- but the top holdings are completely different.

Unlike the relatively concentrated Brazil funds, the Chinese portfolios are extremely diversified, with around 300 holdings apiece and none weighted above around 2%.

Disclosure: No positions