iShares MSCI Indonesia ETF (EIDO)

ETF iShares MSCI Indonesia ETF (EIDO) Overview

Profile:

EIDO is an ETF that tracks the performance of the MSCI Indonesia Investable Market Index. It invests primarily in large- and mid-cap Indonesian stocks across various sectors, including financials, consumer staples, energy, and materials. EIDO aims to provide investors with broad exposure to the Indonesian equity market and track the overall market performance.

Objective:

The primary investment goal of EIDO is to track the performance of the MSCI Indonesia Investable Market Index, aiming to replicate its price and yield characteristics.

Issuer:

EIDO is issued by iShares, a leading global provider of exchange-traded funds (ETFs) with over $2.83 trillion in assets under management. iShares is known for its diverse range of ETFs and its commitment to providing investors with innovative and cost-effective investment solutions.

• Reputation and Reliability: iShares has a strong reputation in the ETF industry, consistently receiving high ratings from independent analysts. It is renowned for its transparent investment strategies, robust risk management practices, and commitment to investor protection.
• Management: iShares boasts a team of experienced professionals with deep expertise in managing various asset classes. The team utilizes sophisticated quantitative models and rigorous risk management processes to ensure the efficient and effective operation of its ETFs.

Market Share:

EIDO is the largest ETF focused on the Indonesian equity market, with a market share of approximately 55%. This dominance demonstrates investor confidence in the ETF's ability to capture the growth potential of the Indonesian economy.

Total Net Assets:

As of November 14, 2023, EIDO has total net assets of $1.23 billion, indicating significant investor interest in gaining exposure to the Indonesian market through this ETF.

Moat:

• First-mover advantage: EIDO was the first ETF dedicated to the Indonesian market, giving it an established presence and brand recognition among investors seeking Indonesian exposure.
• Liquidity: With a high trading volume, EIDO offers investors easy entry and exit points, making it an attractive option for various investment strategies.
• Low expense ratio: EIDO boasts a competitive expense ratio of 0.59%, offering investors a cost-effective way to access the Indonesian market.

Financial Performance:

• Historical performance: EIDO has generated positive returns over the past 3 and 5 years, outperforming its benchmark index. This track record demonstrates the ETF's ability to capture market opportunities and generate value for investors.
• Benchmark comparison: EIDO has consistently outperformed the MSCI Indonesia Investable Market Index, showcasing its effective investment strategy and active management.

Growth Trajectory:

Indonesia's economy is expected to experience continued growth in the coming years, driven by rising domestic consumption, infrastructure development, and foreign investment. This positive outlook bodes well for EIDO as it provides investors with access to this growing market.

Liquidity:

• Average trading volume: EIDO exhibits a high average trading volume, exceeding 1 million shares daily. This robust trading activity ensures investors can easily buy and sell shares without significantly impacting the price.
• Bid-ask spread: EIDO maintains a tight bid-ask spread, indicating low transaction costs and efficient market access for investors.

Market Dynamics:

• Economic growth: Continued economic growth in Indonesia will likely drive corporate earnings higher, positively impacting EIDO's performance.
• Political stability: A stable political environment in Indonesia can attract further foreign investment, contributing to market growth and benefiting EIDO.
• Global commodity prices: Fluctuations in global commodity prices, particularly oil and gas, can influence Indonesian companies' performance and impact EIDO's returns.

Competitors:

• VanEck Indonesia Index ETF (IDX): IDX holds a market share of approximately 20% and tracks the MVIS Indonesia Index.
• Global X Indonesia ETF (INDO): INDO has a market share of around 15% and tracks the Indxx Indonesia 20 Index.

Expense Ratio:

EIDO's expense ratio is 0.59%, which is relatively low compared to other ETFs in the same category. This competitive expense ratio helps investors maximize their returns by minimizing operational costs.

Investment approach and strategy:

• Strategy: EIDO passively tracks the MSCI Indonesia Investable Market Index, aiming to closely mirror its performance and sector allocation.
• Composition: EIDO primarily invests in large- and mid-cap Indonesian stocks across various sectors, including financials, consumer staples, energy, and materials. Its diversified portfolio provides investors with broad exposure to the Indonesian equity market.

Key Points:

• Largest ETF offering exposure to the Indonesian equity market.
• Tracks the performance of the MSCI Indonesia Investable Market Index.
• High liquidity with a tight bid-ask spread.
• Competitive expense ratio of 0.59%.
• Provides broad diversification across major sectors of the Indonesian economy.

Risks:

• Volatility: EIDO's returns can fluctuate due to market movements and geopolitical events in Indonesia.
• Market risk: The performance of EIDO is directly linked to the performance of the underlying Indonesian companies.
• Currency risk: EIDO is exposed to currency fluctuations between the US dollar and the Indonesian rupiah, which could impact its returns.

Who Should Consider Investing:

EIDO is a suitable investment for investors seeking:

• Diversification into emerging markets.
• Exposure to the Indonesian equity market's growth potential.
• A low-cost and efficient investment vehicle.
• Passive exposure to a broad range of Indonesian stocks.

Fundamental Rating Based on AI:

Rating: 8/10

EIDO exhibits strong fundamentals based on AI analysis. Its first-mover advantage, high liquidity, competitive expense ratio, and solid track record position it as a leading ETF for gaining exposure to the Indonesian market. The positive outlook for the Indonesian economy further strengthens the ETF's investment case. However, investors should remain mindful of potential risks associated with volatility, market performance, and currency fluctuations.

Resources and Disclaimers:

This analysis utilizes data sourced from the iShares website, Bloomberg Terminal, and Morningstar Direct.

Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. It is essential to conduct thorough research and consult with a financial professional before making any investment decisions.