Morgan Stanley Adjusts EM ETF Portfolio

In fresh adjustments to its emerging markets ETF portfolio, Morgan Stanley has trimmed its exposure China, the world's fastest growing major economy, to 20.3%. The bank's model emerging markets ETF portfolio uses the SPDR S&P China ETF

as its China ETF of choice. Pointing to signs of a slowdown, the bank scaled back its China exposure and also said it pared its exposure to Russia 9.5%. The bank formerly used the Market Vectors Russia ETF

, the dominant Russia-specific ETF, in the portfolio, but now prefers the iShares MSCI Russia Capped Index Fund

. Morgan Stanley estimates ERUS has gained net inflows in the past 13-weeks of $45 million versus net outflows of RSX of $394 million, according to Barron's. The iShares MSCI Taiwan Index Fund

, which has faltered in recent weeks perhaps due to China weakness, was reduced to 9.2% of the Morgan Stanley EM ETF portfolio. Barron's notes the bank is bullish on Indonesia and the Philippines through the iShares MSCI Indonesia Investable Market Index Fund

and the iShares MSCI Philippines Investable Market Index Fund

. The iShares MSCI Brazil Index Fund

, the largest and most liquid Brazil-specific ETF, now has a weight of 18% in the Morgan Stanley EM ETF portfolio.