Global X Plans Emerging/Frontier ETF

September 03, 2013

Global X is once again looking for unexplored beta in developing markets.



Global X Funds is looking to further its reach into developing markets with an equity strategy that combines emerging and frontier markets, the latest sign that ETF sponsors are fine-tuning how they market developing world strategies in the face of a broad pullback in the emerging markets.

The proposed Global X Next Emerging & Frontier ETF, which will have a primary listing on NYSE Arca under the symbol “EMFM,” will be based on the Solactive Next Emerging & Frontier Index. Global X will open up custodian accoutns in the specified markets/countries and will directly buy the securities within those regions. The fund will also have some via American depositary receipts (ADRs) and global depositary receipts (GDRs) in its portfolio, according to the regulatory filing.

Emerging market asset prices have been falling sharply since spring, as challenges ranging from China’s slowdown, to growing civil unrest in South Africa and Turkey, to concerns about the end of the Fed’s easy-money policies, to the sharp decline in the Indian rupee have spread like wildfire around the world.

It seems that a number of fund sponsors are taking advantage of this moment of possible transition to tweak strategies or bring new ones out. Global X itself rolled out two “first to market” frontier-market exchange-traded funds focused Nigeria and Mongolia, respectively.

The index underlying the proposed fund EMFM excludes the BRIC countries of Brazil, Russia, India and China as well as “the most developed tier of emerging markets,” including South Korea and Taiwan.

The fund will instead focus on countries such as Argentina, Bangladesh, Chile, Colombia, Czech Republic, Egypt, Gabon, Georgia, Hungary, Indonesia, Kazakhstan, Kenya, Kuwait, Laos, Malaysia, Mauritius, Mexico, Mongolia, Namibia, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Peru, Philippines, Poland, Qatar, Slovakia, Tanzania, Thailand, United Arab Emirates and Vietnam, according to the filing.

The fund will also have exposure to Turkey and South Africa.

Global X didn’t say how much the new fund might cost.




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