Earlier this week, Nationwide added to its lineup of exchange traded funds with the debut of the Nationwide Maximum Diversification Emerging Markets Core Equity ETF MXDE.
The new ETF, Nationwide's first new since launching three funds last year, tracks the French asset management firm TOBAM['s Maximum Diversification Emerging Markets Index.
“TOBAM applies liquidity, longevity and socially responsible investment screens in determining the investable universe,” according to Nationwide. “The portfolio seeks to neutrally allocate risk to the effective independent sources of risk present in the market even if it has no position in a particular stock or sector.”
Geographic Exposure
Countries in MXDE's selection universe include China, India, Indonesia, Malaysia, Philippines, South Korea, Taiwan and Thailand. The European countries — including the Middle East — included in the Index are the Czech Republic, Greece, Hungary, Poland, Russia, South Africa and Turkey. The Latin American countries included in the Index are Brazil, Chile, Colombia, Mexico and Peru. MXDE debuted with significant exposure to India, China, Taiwan and South Korea.
The minimum market value for inclusion in MXDE's index is $750 million. MXDE also features a socially responsible investment component.
Companies in the fund's eligible universe are screened against a "socially responsible investment exclusion blacklist," according to Nationwide's Securities and Exchange Commission filing.
“The SRI exclusion blacklist contains those companies whose activities do not meet the criteria for socially responsible investing, such as the production or sale of unconventional weapons, production of tobacco, production of coal or coal-based energy, serious or systematic human rights violations, severe environmental damage, gross corruption or other particularly serious violation of ethical norms. Companies included on the SRI exclusion blacklist are eliminated from the eligible universe and the remaining companies are included in the Index.”
More MXDE Details
The largest holding in MXDE accounts for just 1.63 percent of the new ETF's weight, and just five holdings command weights north of 1 percent, ensuring the new fund has limited single-stock risk. MXDE charges 0.64 percent per year, or $64 on a $10,000 investment.
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