S&P index targets the next emerging markets

Standard and Poor's (S&P) has launched the Next Emerging 40 index, which provides exposure to emerging markets beyond Brazil, Russia, India and China (Bric).

"One major trend we have seen over the last few years is that emerging markets investments have become much more sophisticated," says Mike Orzano, director of global equity indexes at S&P indexes at New York.

"In the early days, a lot of investors were seeing emerging markets as a homogeneous areas where they would invest in one large cap fund, now we are seeing much more sophisticated strategies targeting different countries and regions. This is one of our most recent forays into that area - looking emerging markets beyond the Brics."

The index includes companies from 40 countries including Chile, the Czech Republic, Egypt, Hungary, Indonesia, Malaysia, Mexico, Morocco, Peru, the Philippines, Poland, South Africa, Thailand and Turkey.

S&P says it has had some interest from ETF providers and is in the initial stages of discussion about licensing the index for an ETF.

There is also a risk control version of the index, which switches into cash if volatility levels hit either 10%, 15% or 18%. Orzano says that S&P's risk control feature has proved popular, especially for some of the emerging markets indexes.