Alternative Investments/ESG: A New ETF From First Trust Seeks Out Companies In Democratic EM Countries
A democratic electoral system requires not only fair balloting procedures and basic political competition, but also some respect for the rule of law and civil liberties, such as freedom of assembly.
First Trust Advisors has launched a new fund, the First Trust Bloomberg Emerging Market Democracies ETF (NYSEARCA: EMDM), which focuses on companies in emerging market countries with high regard for political rights and civil liberties.
The ETF seeks investment results that correspond to the Bloomberg Emerging Market Democracies Index, which only includes securities from countries designated by nonprofit democracy advocacy group Freedom House as an Electoral Democracy. (ETF Trends/VettaFi)
The ETF aims to address concerns about the rule of law, political rights, and civil liberties while providing exposure to the long-term growth potential of emerging market stocks. The International Monetary Fund predicts that the majority of global economic growth will occur outside the US, particularly in emerging markets.
“Concerns about the rule of law, political rights, and civil liberties have led many investors to avoid allocating to emerging markets,” said Ryan Issakainen, senior vice president and ETF strategist at First Trust. “By screening out countries that are not considered Electoral Democracies, we believe this ETF addresses many such concerns, while also providing exposure to the robust long-term growth potential of emerging markets stocks.”
Related Story: First Trust Unveils ETF Focused On Alternative Assets
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