Checking In: The "Other" Indonesia ETF

Just two days short of the one-year anniversary of its debut, the iShares MSCI Indonesia Investable Market Index Fund (NYSE: EIDO) makes for a compelling Checking In candidate. After all, we try to limit this feature to ETFs that are less than a year old and we're cutting it close with EIDO.

As many investors already know, when EIDO came to market, it faced stiff competition in the form of the Market Vectors Indonesia ETF (NYSE: IDX), a more well-established emerging markets darling that since its debut in January 2009 had been the only Indonesia-specific ETF available to U.S. investors.

When EIDO debuted, it had a lower expense ratio than IDX, but Market Vectors answered back cutting the fees on IDX to 0.6% from 0.68% in January. EIDO has an expense ratio of 0.61%.

That's a nominal savings and it is worth noting that EIDO has handled this competition quite well from the standpoint of assets under management. The fund has accumulated nearly $200 million in AUM. While that is dwarfed by IDX's $521.4 million in AUM, it's still an excellent haul for just one year of work.

EIDO devotes 32% of its sector weight to financials, not far off the 29.4% IDX allocates to the same sector and there is plenty of duplication among the top-10 holdings of both funds.

For those of us that are ETF nerds and spend a lot of time following the business, it is sometimes surprising to see a competition like EIDO and IDX emerge. Put another way, sure Indonesia is a dynamic emerging market and investors love this asset class, but it's debatable that Indonesia is one of the emerging markets that needs multiple ETFs tracking it.

In 2009, it could have been said that Indonesia might be worthy of multiple ETFs in the future. Well, the future arrived pretty quickly in the form of EIDO and investors should be glad it did. Rhetorical question time: Why? Because since EIDO's debut it has outperformed IDX by 10%.

That's good enough to justify to EIDO's existence and perhaps indicate this is a stealth rivalry in the ETF world.