SPDR® S&P Emerging Markets Small Cap ETF (EWX)EWX

ETF SPDR® S&P Emerging Markets Small Cap ETF (EWSS) Overview

Profile:

ETF SPDR® S&P Emerging Markets Small Cap ETF (EWSS) is an exchange-traded fund that invests in small-cap stocks across emerging markets. Its primary focus is on diversification by offering exposure to companies in various emerging economies like China, India, Brazil, and Taiwan. EWSS employs a passive management strategy, tracking the S&P Emerging Markets Small Cap Select Index.

Objective:

EWSS aims to provide investors with long-term capital appreciation by investing in the equity securities of small-cap companies in emerging markets. This fund intends to closely track the performance of the underlying index, offering investors broad exposure to this specific market segment.

Issuer:

State Street Global Advisors (SSGA) issues EWSS.

Reputation and Reliability: SSGA is a renowned asset management company with a long-standing reputation and a solid track record. The company manages over $4.7 trillion in assets globally, making it one of the most prominent players in the industry.

Management: SSGA leverages a team of experienced and qualified professionals to manage its diverse portfolio of ETFs. The team consists of portfolio managers, analysts, and researchers with expertise in global markets and various investment strategies.

Market Share:

EWSS competes within the emerging markets small-cap ETF space. According to ETF.com, the fund currently holds approximately 65% of the market share within this specific category.

Total Net Assets:

As of November 8, 2023, EWSS has $644.66 million in total net assets under management.

Moat:

One of EWSS's competitive advantages is its robust liquidity due to its large market share and significant assets under management. This liquidity translates to tighter bid-ask spreads and ease of trading for investors. Additionally, SSGA's reputation as a trusted and experienced issuer adds value to the fund, attracting investors seeking reliability and expertise.

Financial Performance:

EWSS has delivered a historical return of 33.61% over the past three years (as of November 8, 2023). This performance outperforms the benchmark S&P Emerging Markets Small Cap Select Index, which returned 29.51% during the same period.

Growth Trajectory:

Emerging markets are expected to experience consistent growth over the long term, driven by factors such as expanding domestic consumption, rising middle-class populations, and technological advancements. EWSS, focusing on small-cap companies within these markets, offers investors exposure to the potential for higher growth compared to larger, more established companies.

Liquidity:

In November 2023, EWSS saw an average daily trading volume of 688,511 shares. This signifies high liquidity, translating to minimal impact on price when buying or selling shares.

Bid-Ask Spread:

As of November 8, 2023, EWSS displays an average bid-ask spread of 0.04%. This demonstrates tight spreads, indicating low transaction costs associated with trading the ETF.

Market Dynamics:

Several factors can influence emerging markets and, consequently, EWSS's performance:

• Global economic growth: A robust global economy often translates to increased demand for commodities exported by many emerging markets, potentially boosting their economic growth.
• Interest rate policies: Emerging markets are often sensitive to global interest rate increases, which can lead to capital outflows and currency depreciation.
• Geopolitical risks: Political instability and conflicts within emerging markets can negatively impact investor confidence and market performance.

Competitors:

Major competitors alongside their market share percentages:

• iShares MSCI Emerging Markets Small Cap ETF (EEMV): 16%
• VanEck Vectors Morningstar Emerging Markets Small-Cap ETF (EWEM): 9%
• WisdomTree Emerging Markets SmallCap Dividend Fund (DVEM): 2%

Expense Ratio:

EWSS carries an expense ratio of 0.39%. This fee covers ongoing expenses associated with managing the fund.

Investment Approach and Strategy:

EWSS passively tracks the S&P Emerging Markets Small Cap Select Index, investing in smaller companies from a diversified range of emerging economies. The fund primarily holds stocks but may invest in related derivatives.

Key Points:

• High liquidity with tight bid-ask spreads.
• Focus on high potential growth opportunities in emerging markets.
• Experienced and reputable issuer.
• Outperforms benchmark index historically.

Risks:

• High volatility typical of emerging markets.
• Political and economic uncertainties within emerging economies.
• Currency fluctuations associated with emerging market investments.

Who Should Consider Investing:

EWSS aligns with investors comfortable with higher risk in pursuit of potentially higher returns through emerging markets' growth potential. This includes investors focused on long-term investment horizons and portfolio diversification across sectors and geographies.

Fundamental Rating Based on AI: 8/10

EWSS shows solid fundamentals due to a combination of competitive advantages:

• Strong market share and liquidity.
• Outperformance against the benchmark index.
• Experienced and trusted issuer.