Daily ETF Watch: First-Ever Pakistan Fund

Global X rolls out the first ETF to cover Pakistan.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Today Global X rolled out the first-ever ETF to cover the troubled country of Pakistan. The Global X MSCI Pakistan ETF (PAK) tracks the MSCI All Pakistan Select 25/50 Index and comes with an expense ratio of 0.68 percent.

 

A country that has significant problems related to terrorism and poverty, Pakistan nevertheless has been included by Goldman Sachs as one of the “Next 11” list of countries to watch in terms of growth potential. The Next 11 is sort of a successor to the BRIC category first promoted by Goldman Sachs more than a decade ago, and, like the BRICs, it was developed by Jim O’Neill before he left the investment bank.

 

Global X also notes in its investment case for the fund that the country has favorable demographics as the country with the sixth-largest population in the world, more than half of whom are under 25. Further, the document cites an expected GDP growth for the country of 4.6 percent through 2019.

 

WisdomTree Plans ‘Weak Dollar’ Fund

 

Days after putting two funds into registration designed to play the rising dollar, WisdomTree has hedged its bets by following up with a filing for a fund designed to take advantage of a weakening dollar.

 

According to its prospectus, the WisdomTree Weak Dollar U.S. Equity Fund will target companies that generate less than 60 percent of their revenue from the U.S. In other words, companies with significant export-related revenues will be favored in the index. Holdings must have market capitalizations of at least $5 billion and meet certain liquidity restrictions.

 

The fund’s benchmark will weight companies based on a combination of their market capitalizations and the correlation between their stock performance and the performance of the dollar, with companies that perform well in a declining dollar environment given more weight than companies that perform poorly in such an environment.

 

The Index is a modified market-capitalization-weighted index designed to increase weight to companies that have the highest inverse correlation in equity performance to a strong U.S. dollar. It also applies a sector cap at each annual reconstitution.

 

Like the WisdomTree Strong Dollar U.S. Equity Fund and the WisdomTree Strong Dollar Emerging Markets Fund in the previous filings, the WisdomTree Weak Dollar U.S. Equity Fund has the potential to be the first of its kind. There has yet to be an index-based equity fund designed to benefit specifically from a strengthening or weakening dollar.

 

The filing did not include an expense ratio or ticker, nor did it detail which exchange the fund would list on.

 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.