Market Vectors ETF Trust today launched four new Exchange Traded Funds (ETFs) powered by factor-based indices from MSCI. They are: Market Vectors MSCI International Quality ETF (NYSE Arca: QXUS), Market Vectors MSCI Emerging Markets Quality ETF (NYSE Arca: QEM), Market Vectors MSCI International Quality Dividend ETF (NYSE Arca: QDXU), and Market Vectors MSCI Emerging Markets Quality Dividend ETF (NYSE Arca: QDEM).
“Quality matters. Quality as an investment factor has historically outperformed broad international and emerging markets equities with relatively lower volatility over long time periods1, but until now, a quality-focused, factor-based approach has usually been accessible only through active strategies,” said Amrita Bagaria, International Equity ETF Product Manager with Market Vectors. “We’re very excited to introduce these quality factor ETFs to the broad investment marketplace, and we are particularly pleased to be partnering with MSCI, a global leader in international indexing. We have heard the concerns of investors who understand that you need to be selective and find a way to identify quality stocks, because you don’t necessarily want to hold every single company when investing in international or emerging markets.”
QXUS seeks to replicate, before fees and expenses, the price and yield performance of the MSCI ACWI ex USA Quality Index (ticker: M1WDUQU); QEM seeks to replicate, before fees and expenses, the price and yield performance of the MSCI Emerging Markets Quality Index (ticker: M1EFQU).
“Holdings in both indexes are screened for historically high return on equity [ROE], stable annual earnings growth and low financial leverage,” said Diana Tidd, Managing Director and Head of the MSCI Index Business in the Americas. “Our research suggests that the Quality growth companies have high ROE, low financial leverage and stable earnings that are uncorrelated with the broad business cycle and may provide diversification benefits in portfolio allocation.”
QDXU and QDEM add dividends to the focus of their underlying indices, with QDXU seeking to track, before fees and expenses, the price and yield performance of the MSCI ACWI ex USA High Dividend Yield Index (ticker: M1WDUDY), and QDEM seeking to track, before fees and expenses, the price and yield performance of the MSCI Emerging Markets High Dividend Yield Index (ticker: M1EFDY).
“Constituents in MSCI’s High Dividend Yield (HDY) indexes are quality growth companies offering a higher dividend yield relative to their respective Parent index and with a track record of providing sustainable and consistent dividend payouts,” continued Tidd.
“We believe the MSCI approach is particularly compelling in these instances,” added Bagaria. “By combining the search for dividend yield in international and emerging markets with MSCI’s Quality screens, investors will be able to add exposures that may potentially generate excess returns and benefit their portfolios in down markets.”
Market Vectors notes that investing in international and emerging markets comes with associated risks, including risks associated with investing in foreign securities, risks associated with investing in medium-capitalization companies, and more.
Though these funds are Market Vectors’s first international factor-based ETFs, they join an already robust group of international and emerging market offerings, including the Indonesia Index ETF (IDX), Russia ETF (RSX), Vietnam ETF (VNM), and more.
QXUS has a gross expense ratio of 0.69 percent and a net expense ratio of 0.45 percent. QEM has a gross expense ratio of 0.74 percent and a net expense ratio of 0.50 percent. QDXU has a gross expense ratio of 0.67 percent and a net expense ratio of 0.45 percent. QDEM has a gross expense ratio of 0.73 percent and a net expense ratio of 0.50 percent. The net expense ratios for all four funds are capped contractually until at least February 1, 2015.
About Market Vectors ETFs
Market Vectors exchange-traded products have been offered since 2006 and span many asset classes, including equities, fixed income (municipal and international bonds) and currency markets. The Market Vectors family totaled $22.1 billion in assets under management, making it the seventh largest ETP family in the U.S. and 10th largest worldwide as of December 31, 2013.
Market Vectors ETFs are sponsored by Van Eck Global. Founded in 1955, Van Eck Global was among the first U.S. money managers helping investors achieve greater diversification through global investing. Today, the firm continues this tradition by offering innovative, actively managed investment choices in hard assets, emerging markets, precious metals including gold, and other alternative asset classes.
Market Vectors MSCI International Quality ETF (QXUS), Market Vectors MSCI Emerging Market Quality ETF (QEM), Market Vectors MSCI International Quality Dividend ETF (QDXU), and Market Vectors MSCI Emerging Market Quality Dividend ETF (QDEM) are subject to elevated risks, including those associated with investments in foreign securities, in particular emerging markets issuers, which include, among others, greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foreign governments, decreased market liquidity, political instability, and restrictions on foreign ownership. QEM and QDEM are subject to risks associated with Asian issuers, as an investment in securities of issuers in Asia involves risks and special considerations not typically associated with investment in the U.S. securities markets. To the extent that the Funds’ investments are concentrated in certain sectors, the Funds will be susceptible to loss due to adverse occurrences affecting those sectors. “Quality” is a measure of certain historical variables used by the Index Provider and is not intended to imply a judgment about the future performance of any Index constituent or the Index as a whole. The Funds may loan securities, which may subject them to additional credit and counterparty risk. Investors should be willing to accept a high degree of volatility and the potential of significant loss. Please see each Fund’s prospectus for complete risk information.
Diversification does not assure profit nor protect against loss.
The “Net Asset Value” (NAV) of a Market Vectors exchange-traded fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF’s intraday trading value. Market Vectors ETF investors should not expect to buy or sell shares at NAV.
The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The Fund’s prospectus contains a more detailed description of the limited relationship MSCI has with Van Eck Securities Corporation and any related funds.
Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called “creation units” and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 888.MKT.VCTR or visit marketvectorsetfs.com. Please read the prospectus and summary prospectus carefully before investing.
Not FDIC Insured — No Bank Guarantee — May Lose Value
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1 MSCI ACWI ex USA Quality Index versus MSCI ACWI ex USA Index and MSCI Emerging Markets Quality Index versus MSCI Emerging Markets Index, respectively.
Mike MacMillan/Chris Sullivan