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

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

Profile:

EWSS is an ETF that invests in emerging market equities, specifically focusing on small-cap companies. It tracks the S&P Emerging Markets Small Cap Index, which consists of approximately 500 small-cap companies from various emerging markets. EWSS offers diversified exposure to a broad range of sectors within these markets.

Objective:

Its primary investment goal is to achieve long-term capital growth by tracking the performance of the underlying index. The ETF seeks to provide investors with a convenient and cost-effective way to invest in the rapidly growing emerging markets.

Issuer:

EWSS is issued by State Street Global Advisors (SSGA), one of the world's leading asset management firms with a strong reputation and extensive experience. SSGA has a long track record of managing ETFs and mutual funds across various asset classes.

Market Share:

EWSS holds a significant market share in the emerging markets small-cap ETF space, competing with other ETFs like iShares MSCI Emerging Markets Small-Cap ETF (EEML) and Vanguard FTSE Emerging Markets Small-Cap ETF (VWO).

Total Net Assets:

EWSS currently has approximately USD 2.4 billion in total assets under management

Moat:

EWSS boasts several competitive advantages:

• Diversification: It provides access to a large number of small-cap companies across different sectors and countries within emerging markets, mitigating single-company risk.
• Cost-efficiency: EWSS offers a relatively low expense ratio compared to other similar ETFs, making it attractive for cost-conscious investors.
• Liquidity: EWSS enjoys high trading volume, ensuring easy buying and selling of the ETF.

Financial Performance:

EWSS has historically delivered competitive returns. However, its performance can fluctuate due to emerging market volatility. Comparing its performance against the benchmark index S&P Emerging Markets Small Cap Index is important to gauge its effectiveness.

Growth Trajectory:

Emerging markets are expected to continue growing, driving potential future growth for EWSS. However, investors should consider the inherent volatility of emerging markets.

Liquidity:

EWSS has a high average trading volume, indicating good liquidity. Its bid-ask spread is also relatively tight, implying low trading costs.

Market Dynamics:

The ETF's market environment is influenced by several factors:

• Global economic conditions: Economic growth in emerging markets directly impacts the performance of the underlying companies.
• Geopolitical events: Political instability in emerging markets can affect investor sentiment and market performance.
• Commodity prices: Emerging markets are often reliant on commodity exports, and fluctuations in commodity prices can impact the ETF's performance.

Competitors:

Key competitors include EEML (iShares MSCI Emerging Markets Small-Cap ETF) and VWO (Vanguard FTSE Emerging Markets Small-Cap ETF). EWSS competes favorably due to its diversification, low expense ratio, and strong track record.

Expense Ratio:

The expense ratio for EWSS is currently 0.35% per year.

Investment Approach and Strategy:

EWSS aims to passively track the S&P Emerging Markets Small Cap Index. The ETF invests in the stocks comprising the index in proportion to their respective weightings.

Key Points:

• Diversified exposure to emerging market small-cap companies
• Long-term capital growth potential
• Low expense ratio and high liquidity
• High volatility due to exposure to emerging markets

Risks:

• Market Risk: Emerging markets can be volatile due to political instability, economic fluctuations, and currency risks.
• Small-cap Risk: Small-cap companies are generally more volatile than large-cap companies and can be more susceptible to negative economic events.
• Liquidity Risk: While EWSS itself is liquid, some underlying holdings may be less liquid, making it difficult to sell them quickly in times of market stress.

Who Should Consider Investing:

EWSS is suitable for investors:

• Seeking long-term capital appreciation through emerging market equities
• Comfortable with a higher level of risk
• Investing for the long term

Evaluation of EWSS's fundamentals using an AI-based rating system:

Fundamental Rating Based on AI: 7.5 out of 10

Justification:

EWSS receives a high rating due to its diversified holdings, low expenses, strong management team, and solid track record. However, the AI system recognizes the inherent risks associated with emerging markets and small-cap investing, resulting in a slightly lower score.

Resources and Disclaimers:

This analysis used information from the following sources:

• State Street Global Advisors: https://www.ssga.com/us/en/individual/etfs/etf-library-detail?ticker=ewss
• Morningstar: https://www.morningstar.com/etfs/arcx/ewss/quote

Please remember that this analysis is for informational purposes only and should not be considered investment advice. You should always conduct your own due diligence before making any investment decisions.