Global X beats Van Eck to market with an industry-first Andean-region ETF.
Global X, the New York-based fund provider known for its commodities and emerging markets strategies, expanded its roster of Latin American funds with the launch today of the market’s first ETF to focus on the Andean region.
The rollout beats Global X’s New York-based rival Van Eck Global to the punch. Van Eck filed with U.S. securities regulators on Dec. 20 to market the Market Vectors Andean Equity ETF, a fund that will canvass the same region, though it will focus mostly on small- and mid-cap names. Global X last amended its filing to offer its fund on Jan. 26 in paperwork that described four different ETFs.
The Global X FTSE Andean 40 ETF (NYSEArca: AND) invests in the 40 largest companies in Chile, Peru and Colombia. The three countries are in a pending agreement to merge their stock exchanges in a move that would create the second- largest stock exchange in Latin America, second only to Brazil’s and 50 percent larger than Mexico’s, according to the company.
“In the last year, these countries were the three highest ranked countries in terms of ease of doing business in Latin America,” Global X Funds research analyst Alex Ashby told IndexUniverse. “Most broad-based products covering South America today are overweight Brazil, which is understandable, but this region doesn’t have the type of focused exposure it should.”
From a market size perspective, the combined market capitalization of Chile, Colombia and Peru is bigger than Mexico’s, and roughly half the size of Brazil’s, Ashby noted.
“We want to take advantage of the growing synergy between these markets,” he said. “We try to find corners of the market that are underserved, and this is one of them.”
AND, which costs 0.72 percent in annual fees, tracks the FTSE Andean 40 Index. Nearly 50 percent of the portfolio is allocated to Chilean names, with the remainder split between Peru and Colombia. Its top holdings include companies such as Southern Copper Corp., Minas Buenaventura and Pacific Rubiales Energy. Basic materials make up the largest sector allocation, followed by financials, and oil and gas names, the company said.
Global X already manages a $154 million Colombia-focused ETF, (NYSEArca: GXG). The new ETF will overlap a bit with GXG, although weightings of securities should differ. Moreover, AND offers investors a more diverse play on the region, Ashby said.
Global X is one of the fastest-growing ETF providers in the U.S., hitting $1 billion in assets under management at the end of 2010. AND is the first in a planned lineup of four-international ETFs, which the company plans to launch during February and March.