BMO GAM to Close Emerging Markets ETF in January 2020

Posted on Dec 2, 2019 by James Eugene in Africa, Asia, Europe, LatAm & Caribbean, MENA, News, Regions // 0 Comments

BMO Global Asset Management has announced that it will close down the BMO MSCI Emerging Markets Income Leaders UCITS ETF, along with a list of other exchange traded funds, on Tuesday 21st January 2020.

The BMO MSCI Emerging Markets Income Leaders UCITS ETF (ticker: ZIEM; “the ETF”) was created on 6th December 2016 and was designed to track the performance of the MSCI Emerging Markets Select Quality Yield Index and aims to capture the performance of quality income stocks through a two step screening process:

Identify the 50% of constituents of the MSCI Emerging Markets Index which score highest on three fundamental variables: high return on equity, stable year-over-year earning growth and low financial leverage.
From the companies that satisfy the first criteria, identify the 50% of the securities with the highest dividend yield.

The ETF had sizable exposure in Taiwan (23.45), China (20.60%) and South Korea (8.53%), with Taiwan Semiconductor Manufacturing (5.83%), Samsung Electronics (5.14%) and China Mobile (3.25%) being the largest constituents. The ETF returned 19.27% between 6th December 2016 and 21st November 2019, compared to the MSCI Emerging Markets Select Quality Yield Index’s 20.99% over the same time period.

Performance of the BMO MSCI Emerging Markets Income Leaders UCITS ETF vs the benchmark MSCI Emerging Markets Select Quality Yield Index

The decision to close down the ETFs was “based on a variety of factors, including the current level of assets under management and projected asset growth in the current market environment”, the group said. “Based on these factors, the Investment Manager recommended the termination of the Sub-Funds. The Directors considered the information and determined it is in the best interests of shareholders to terminate each Sub-Fund in accordance with the Prospectus”. The BMO MSCI Emerging Markets Income Leaders UCITS ETF has $5.34 million assets under management (AUM) as of 29th November 2019.

The funds will remain open for redemption until the effective date of 21st January 2020, where the shares in the ETFs will be redeemed at the applicable net asset value (NAV) per share, with settlement of the redemption taking place within ten days of the effective date.

The full list of ETFs due to be closed in January 2020 by BMO are listed in the figure below: