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Tennessee Becomes Top Owner in 12 Emerging Markets Stock ETFs

Tennessee is the top or second-biggest investor in 12 exchange-traded funds for emerging markets, after deciding to add the international assets about a year ago.

The state was the largest holder of Global X FTSE Colombia (GXG) 20 ETF, with 23 percent; iShares India 50 ETF, with about 24 percent; iShares MSCI South Africa ETF, with about 34 percent; as well as in iShares funds for South Korea, Taiwan, Thailand and Turkey, according to the latest filings compiled by Bloomberg.

While ETFs are similar to passively managed mutual funds that track indexes of equities, bonds or commodities, they are bought and sold on exchanges during the trading day like shares of companies.

Tennessee Chief Investment Officer Michael Brakebill, who oversees the $38.8 billion Tennessee Consolidated Retirement System, said from Nashville that the investment would typically last five to 15 years. The system returned 9.9 percent in fiscal 2013, compared with 5.6 percent the previous fiscal year, according to its annual report.

To satisfy the state legislature, he selected funds according to criteria such as countries that ranked low in corruption, he said.

The state’s ownership percentage in some funds will probably decline as the investment vehicles grow, he said.

Tennessee’s holdings ranked second in iShares ETFs for Chile, a second India fund, Indonesia, Malaysia and Poland, Bloomberg data show.

IShares funds are a product of New York-based BlackRock Inc. (BLK), the world’s largest money manager. The company had no comment, said Melissa Garville, a spokeswoman.

To contact the reporter on this story: Margaret Newkirk in Atlanta at mnewkirk@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum, Justin Blum

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