Global X Funds, the New York-based ETF firm known for its niche strategies that now include a fishing and a food ETF, launched its third ETF this week, this one targeting small-cap companies in Mexico.
The Global X Mexico Small Cap ETF (NYSEArca: MEXS), which has a 0.69 percent annual expense ratio, seeks to tap into Mexico’s growing middle class and booming manufacturing and service industries. Small-cap companies are said to be directly connected to revenues generated in local economies.
Mexico’s economic growth in the fourth quarter of 2010 hit 4.6 percent, most of which stemmed from domestic demand, according to company data on Global X’s website. Mexico, which boasts a per capita income twice as large as Brazil’s, is expected to see increased access to credit while keeping inflation in line with regional peers.
“MEXS provides an efficient way to play Mexico’s domestic growth story,” Bruno del Ama, Global X’s CEO, said in a press release. “Improvement in Mexico’s terms of trade with the U.S., its largest trading partner, has helped increase investment in domestic industries.”
MEXS tracks the Solactive Mexico Small-Cap Index. The top three of the benchmark’s 28 holdings are Megacable Holdings, Grupo Comercial Chedraui and Grupo Continental SAB, the company said.
Nearly 30 percent of the portfolio is allocated to consumer discretionary names, followed by industrials and consumer staples, each representing some 20 percent of the mix.
Global X’s niche strategies have served the company well so far. It has amassed more than $1.7 billion in assets since launching its first fund in early 2009. It now has almost 30 ETFs.