Despite recent volatility in emerging markets, State Street Global Advisors is gearing up to launch a common trust fund of stocks in "pre- emerging markets."

The fund will offer institutional investors the opportunity to track stocks listed in Botswana, Ghana, Ecuador, Trinidad and Tobago, Mauritius, Kenya, Ivory Coast, and Bangladesh. Stocks from these countries are not part of any current fund.

State Street plans to launch the fund as soon as it gathers $1 million to $3 million of assets, said James Francis, a State Street vice president.

Mr. Francis said he will manage the fund with Eric Baggesen, also a vice president at State Street. When the fund starts to trade it will have a cap of $100 million and will take in money every quarter, Mr. Francis said.

The common trust fund is designed for tax-exempt U.S. and non-U.S. institutions, such as corporate and public pension plans and offshore accounts, Mr. Francis said.

Because the new offering will be a common trust fund, State Street need not file with the Securities and Exchange Commission, Mr. Francis said.

Pre-emerging markets are "volatile," he conceded; "this is something we've known about since we began researching it" more than a year ago. But State Street is more concerned with trading liquidity than market volatility, Mr. Francis said.

"Until we get in there and start trading, we're not going to have an accurate picture of what the liquidity looks like," he said. That is why the adviser group is starting with a "very small" amount of money.

Mr. Francis also noted that markets now considered "emerging" began life in the pre-emerging stage.

"Real growth ... is going to come from that area," said Geoffrey H. Bobroff, an East Greenwich, R.I.-based mutual fund consultant. "But there's obviously risk there." Mr. Bobroff noted that investors must be mindful of the currency risks in such markets, as well as the need to research the companies in such a fund.

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