Van Eck Registers 2nd Nigeria-Focused ETF

November 02, 2011

Go figure, but Van Eck now has two Nigeria-focused ETFs in its product pipeline.

Van Eck Global, the New York-based money management firm known for its commodities funds, filed paperwork with the Securities and Exchange Commission to launch an ETF focused on Nigerian equities, its second such filing in about four months.

The company, which filed to market the Market Vectors Nigeria ETF with the SEC in June, added the Market Vectors Nigeria-Focused Western Africa ETF to its product pipeline in the latest filing, dated Oct. 31.

Van Eck's second Nigeria-focused fund limits exposure to the oil-rich but somewhat unstable West African nation to 50 percent of the portfolio, whereas the first ETF would focus exclusively on companies located in Nigeria, according to the two regulatory filings.

Nigeria, Africa’s most populous nation, exports more than 2 million barrels of oil per day, making it the No. 8 crude exporter, according to the “CIA World Factbook.” However, it has largely failed to diversify its economy away from petroleum. Oil revenues provide 95 percent of the country’s foreign exchange earnings and fund about 80 percent of its budget, the CIA said.

The second Nigeria-focused fund will normally invest 80 percent of its total assets in the benchmark, Van Eck’s own Market Vectors Nigeria-Focused Western Africa Index. Also, up to 80 percent of the fund may comprise depository receipts, which are more liquid than locally listed stocks, an important consideration in the case of developing West African markets.

Two Funds Are Better Than One?

It wasn't immediately clear why New York-based Van Eck would have two Nigeria-related funds in the works, but the new one would limit investors' exposure to what the CIA described in its Factbook as recurring unrest in the nation.

That unrest is apparently significant enough for Van Eck to explicitly mention it in its second filing.

The fund will utilize a “passive” or indexing investment strategy that seeks to approximate the performance of its underlying index, and Van Eck expects the correlation to be 95 percent or more.

The filing didn’t list an expense ratio for the new fund or a ticker symbol.

 

 

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