The company says the Polish economy is one of the biggest in the European Union and one of the fastest growing in Central Europe. It developed the new product to meet investor demand for single country emerging market ETFs.
The ETF, which is will provide exposure to Poland by tracking the MSCI Poland index, which comprises over 20 big and medium sized Polish equities. The ETF will invest mainly in the financials and energy sectors but also in utilities, materials, telecommunications and industrial sectors.
BlackRock says the ETF provides investors with instant and transparent exposure to an attractive and hard-to-access market. Unlike some ETFs that use derivatives to replicate the performance of an index, this fund will track the MSCI Poland index by physically investing in the underlying assets. Dividends will be automatically reinvested in to the ETF to remove the administrative burden of processing regular cash flows and dividends paid by the fund.
The ETF may appeal to investors who are looking to diversify existing emerging market holdings with an allocation to Poland, and who want the liquidity offered by an ETF.
Polish equities are relatively undervalued, so positive news may lead to big rises in share prices. The sale of state-owned energy and financial assets and the expansion of private businesses are positive factors, but there are concerns such as rising national debt and the need for various reforms, including changes to the healthcare and pension systems.
Tracking a single country emerging market index is also higher risk and likely to form a small part of a client’s overall portfolio.