Global X, the NY-based issuer of exchange-traded products famous for its niche offerings in international, income and commodity funds, is set to extend its reach in the developing markets with a pure-play equity strategy that combines both frontier and emerging markets. After the recent broad pullback in the emerging markets, ETF sponsors are obviously having a relook at their developing-market strategies.
According to SEC filing, the proposed Global X Next Emerging & Frontier ETF (EMFM) will track the Solactive Next Emerging & Frontier Index and will invest at least 80 percent of total assets in the securities of the underlying index and in GDRs and ADRs based on the securities in the underlying index.
The fund will open up custodian accounts in the “next” emerging markets, which are defined as the economies beyond the so-called BRIC and other developed Asian economies such as South Korea and Taiwan, and will directly buy securities from those markets.
The underlying index has about 200 constituents from a wide geographical region that includes east Europe, Latin America, Africa, the Middle East and Asia. EMFM will have exposure in companies that are domiciled in counties including Argentina, Bangladesh, Chile, Colombia, Czech Republic, Egypt, Gabon, Georgia, Hungary, Indonesia, Kazakhstan, Kenya, Kuwait, Laos, Malaysia, Mauritius, Mongolia, Pakistan, Panama, Peru, Philippines, Poland, Qatar, Slovakia, Tanzania, Thailand, United Arab Emirates and Vietnam, as well as Turkey and South Africa, and that generate at least 50 percent of their revenues from these markets. The index contains the largest stocks according to market capitalization and weights them by modified liquidity.
Global X has some experience in frontier market products and was the first issuer to launch a Colombia-focused product – the Global X FTSE Colombia 20 ETF (GXG), in the US way-back in 2009. GXG has ratcheted up a little over $160 million in assets in the past four years. Two other frontier-market focused products, the Global X Central Asia & Mongolia Index ETF (AZIA) and the Global X Nigeria Index ETF (NGE) were unveiled in April this year.
Global X didn’t mention annual fund management fees in the regulatory filing.
Disclosure: No holdings