• iShares MSCI EAFE Small Cap Index Fund
• iShares MSCI EM Small Cap
• iShares MSCI Japan Small Cap

The prospectus for the EAFE fund is available here. The prospectus for the EM and Japan funds is available here.

The funds will track recently launched small cap indexes from MSCI Barra, which were created during the recent revamp of the MSCI index line-up. The EAFE fund will charge 0.40% in expenses, while EM will charge 0.75% and Japan 0.59%.

The move comes as more and more investors look towards small-cap international as a new tool to diversify their portfolios. Historically, investors have turned to international stocks for non-correlated returns. In today's globalized era, however, large caps around the world are becoming increasing correlated, as they tend to be driven by global - rather than local - economic trends. S&P components, for instance, actually gather approximately half their revenues overseas. The thinking is that small-caps will be more exposed to local economies, and will therefore provide superior diversification benefits versus U.S. equities inside investors' portfolios.

Already, ETF investors have a number of choices in this space. WisdomTree (WSDT.PK) was the leader in the small-cap international market: its International Small Cap Dividend ETF (DLS) is WisdomTree's single largest fund, with over $500 billion in assets. WisdomTree also offers small-cap Europe and Japan funds.

State Street Global Advisors [SSgA] has also planted a stake in the ground, launching the SPDR S&P International Small Cap ETF (GWX) and the SPDR Russell/Nomura Small Cap Japan Fund (JSC). Those funds have gathered $79 and $173 million, respectively.

These aren't even the first filings from BGI, which also has an small cap international developed markets ETF in registration tied to a FTSE benchmark.

It remains to be seen if BGI can compete against the first mover advantage of WisdomTree and SSgA, but given the small asset counts for existing funds, it certainly seems possible. At the very least, BGI's massive sales force and aggressive outreach group will certainly help raise the profile of the small cap international space.