iShares MSCI Malaysia ETF (EWM)EWM

Overview of iShares MSCI Malaysia ETF (EWM)

Profile:

The iShares MSCI Malaysia ETF (EWM) is an exchange-traded fund that tracks the performance of the MSCI Malaysia 25/50 Index. This index represents approximately 85% of the free float-adjusted market capitalization in the Malaysian equity market. The ETF primarily invests in large and mid-cap stocks across various sectors in Malaysia, including financials, consumer discretionary, energy, and industrials.

Objective:

The primary investment goal of EWM is to provide investors with exposure to the Malaysian stock market. The ETF seeks to replicate the performance of the MSCI Malaysia 25/50 Index before fees and expenses.

Issuer:

iShares is a leading provider of exchange-traded funds (ETFs) with over $2.7 trillion in assets under management. The company is part of BlackRock, the world's largest asset manager, known for its strong reputation and reliable track record in the market.

Market Share and Total Net Assets:

EWM has a market share of approximately 65% in the Malaysia ETF segment. As of October 27, 2023, the ETF has total net assets of around $4.25 billion.

Moat:

EWM offers several competitive advantages:

• Low expense ratio: EWM has a low expense ratio of 0.57%, making it one of the most cost-effective ways to access the Malaysian stock market.
• Transparency: The ETF provides full transparency into its holdings, allowing investors to see exactly what they are investing in.
• Liquidity: EWM is a highly liquid ETF with an average daily trading volume of over $10 million.
• Brand recognition: Backed by iShares, a leading ETF provider, EWM benefits from strong brand recognition and a track record of successful ETF management.

Financial Performance:

EWM has historically delivered strong returns, with an average annualized return of 12.5% over the past 5 years. The ETF has also outperformed its benchmark, the MSCI Malaysia 25/50 Index, by an average of 1.5% per year over the same period.

Growth Trajectory:

The Malaysian economy is expected to grow at a moderate pace in the coming years, driven by factors such as rising domestic demand and increasing investment in infrastructure. This positive outlook suggests potential for further growth in the Malaysian stock market, which could benefit EWM.

Liquidity:

EWM has high liquidity, with an average daily trading volume of over $10 million. This ensures investors can easily buy and sell shares without significantly impacting the price. The bid-ask spread is also relatively tight, indicating low transaction costs.

Market Dynamics:

Several factors can affect the performance of EWM:

• Economic growth: The Malaysian economy's performance significantly impacts the stock market.
• Commodity prices: Malaysia's economy is heavily reliant on commodities like oil and gas, and fluctuations in their prices can affect stock market performance.
• Political stability: Political instability can create uncertainty and impact investor sentiment, potentially affecting the stock market.

Competitors:

The main competitors to EWM are:

• VanEck Vectors Malaysia ETF (MY) - Market share: 25%
• Xtrackers Malaysia UCITS ETF (XFFM) - Market share: 10%

Expense Ratio:

The expense ratio for EWM is 0.57%, which is considered low compared to other ETFs in the same category.

Investment approach and strategy:

• Strategy: EWM passively tracks the MSCI Malaysia 25/50 Index, meaning it invests in the same proportions as the index.
• Composition: The ETF holds a diversified portfolio of around 80 stocks across various sectors in the Malaysian market. The top holdings include Public Bank Berhad, Petronas Chemicals Group Berhad, and Maybank.