This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

EG Shares Utilities ETF Looks for Light in Emerging Markets

Stocks in this article: UGEM

NEW YORK ( TheStreet) -- Exchange-traded fund provider Emerging Global Shares last week listed its complete suite of emerging-market sector ETFs. Several of the funds look particularly interesting including the EG Shares Utilities GEMS ETF (UGEM).

The fund has 30 holdings and will charge a 0.85% expense ratio. The yield of the underlying index is 2.25% which will make for a low yield for the fund. The subsector weighting allocates 54% to what the index provider calls conventional electricity, 30% to alternative electricity with much smaller weightings to gas and water.

At the country level, Brazil is the largest by far at 22% followed by India and surprisingly Chile at 14% each, Colombia 9%, Czech Republic 8% and Malaysia 7%. Conspicuously absent is China, which only weighs in at 5.5%. The small weight to China is a positive for several reasons including the fact that China is featured prominently in many emerging-market ETFs including many of the sector funds from EG Shares. In terms of volatility it is also a relief that the "alternative electricity" group in not made up entirely of Chinese solar companies which would have been easy to do, but not doing so allows the fund to offer large exposure to countries that are often difficult to access.

The fund has several tiers of holdings with the three largest names, CEZ from the Czech Republic, Empresa de Energia de Bogota from Colombia and Companhia Energetica de Minas Gerais Cemig from Brazil, at 7% to 8% of the fund. There are nine companies at 4% to 5% of the fund and the remaining 18 stocks have much smaller weightings.

One concern is the low trading volume. Granted, the fund only has a couple of days under its belt but there has been essentially no volume. Any ETF provider will tell you that liquidity is not defined by the number of shares traded but by the ability to get trades executed. This is true, but it might be more true for buy orders than sell orders and a little bit of skepticism for any low volume fund is warranted. As a practical matter, this issue is more relevant for advisers looking to trade for many clients; an individual needing a few hundred shares or less won't have a problem executing a trade on either side of the market.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs