International small-caps are the new hot place to be, and Barclays Global Investors wants to be there with you. The ETF giant filed prospectuses for small-cap versions of three of its most popular international ETFs:
- iShares MSCI EAFE Small Cap Index Fund
- iShares MSCI Emerging Markets Small Cap Fund
- iShare MSCI Japan Small Cap Fund
BGI will charge 0.40% in annual expenses for the EAFE fund, 0.75% for the Emerging Markets funds and 0.59% for the Japan fund.
The funds track the recently introduced international small cap indexes from MSCI.
Many investors believe that, in the era of multinational corporations, large-cap international stocks have become too closely correlated with U.S. equities. Small-caps offer an alternative. The thinking is that small-caps are more closely correlated with local economies, and thereby offer investors more of a correlation benefit than their large-cap peers. Already, small-cap international funds are available from WisdomTree, State Street Global Advisors and others. The largest small-cap international ETF is also the first: the WisdomTree International SmallCap Dividend Fund (DLS), with assets of $535 million.