SSgA Plans Second Latin America ETF

December 29, 2011

SSgA looks to roll out a second equity ETF focused on Latin America.

State Street Global Advisors (SSgA), the fund provider behind the SPDR ETFs, filed paperwork with the Securities and Exchange Commission to bring to market an ETF that tracks an index based on publicly traded companies in Latin America. It will be SSgA’s second fund focused on the region.

The SPDR S&P MILA 40 ETF is entering a regional niche occupied by only a few funds such as the segment leader, the $1.7 billion iShares S&P Latin America 40 Index Fund (NYSEArca: ILF) and SSgA’s own $115 million SPDR S&P Emerging Latin America ETF (NYSEArca: GML), which has 107 holdings. Apart from size of the portfolio, it’s not immediately clear how SSgA’s new fund differs from GML.

Latin America has become increasingly popular among investors in the past 10 years. A huge part of that story is the ongoing rise of Brazil, which is one of the world’s biggest agricultural producers and is quickly turning into a big oil producer as well. Also, countries like Chile that produce copper for China and companies like Mexico-based cellular firm America Movil are part of the attraction.

The new fund will use a sampling strategy to track an index comprising the largest and most liquid stocks trading on the Mercado Integrado Latinoamericano (MILA) platform, an integrated trading venture formed by various Latin American exchanges.

The fund’s underlying index itself consists of the largest 40 eligible stocks based on float-adjusted market capitalization that must be above $100 million as of the rebalancing date. Further, to ensure liquidity, constituent stocks must have a three-month average daily value traded in their local markets of above $250,000 as of the “rebalancing reference date,” the filing said.

According to the filing, the principal risks of investing in the MILA 40 ETF are typical of investments in emerging markets and include greater market volatility, high levels of inflation, deflation and/or currency deflation than those typically found in developed markets.

Latin American countries in particular are typically characterized by high unemployment, inflation and high interest rates. Further, because a relatively small portion of companies represent such a large percentage of the Latin American market, they may be more vulnerable to adverse economic circumstances and market movements.


Trying to figure out alternatives ETFs? Use our alternatives ETFs channel, library and ETF screener!

Want to learn more about smart-beta ETFs? Check out our smart-beta guide, essentials library and ETF screener!


The broad-market 'SPY' and energy ETF 'XLE' were the biggest winners in terms of inflows on Thursday, Aug. 27.

The top three ETF issuers all saw net inflows into their products as the market surged on Thursday, Aug. 27.


By Dave Nadig

With many ETFs currently trading well off fair value, what’s an ETF investor to do? Don’t panic.

By Matt Hougan

Out-of-favor funds can bring attractive returns.

By Matt Hougan

New data from Charles Schwab show that the death of mutual funds is happening faster than we thought.

By Dave Nadig

Grab the popcorn. Precidian just doubled-down on its nontransparent active ETF proposal with the SEC this morning.


By John Del Vecchio

An index that goes long financially sound companies and shorts the ones with problematic balance sheets.

By Dan Draper

The nature of retirement is changing. How can investors adapt?

By Invesco PowerShares

A more in-depth look at the smart-beta survey's results.