Frontier ETFs Launching with Exposure to Nigeria, Mongolia, Kazahkstan
They say there is an ETF for just about everything these days. It must be true if you look at two international equity exchange traded funds coming this week from Global X. These will cover Central Asia & Mongolia in one ETF and Nigeria in another ETF. Both economies fall under the frontier market investment strategies we have covered on and off.
Forget China! Think about the even more emerging part of Asia. The Global X Central Asia & Mongolia Index ETF (NYSEMKT: AZIA) will offer investors exposure to investing in foreign listings of Central Asian companies and the companies that derive significant revenues from the region. China has emerged as a key destination for many of the key resources of the region and it has been investing heavily on the energy and transportation infrastructure in the region. This ETF will have gross expense fees of 0.69% at the launch and it is based upon the Solactive Central Asia & Mongolia Index.
The Global X Nigeria Index ETF (NYSEMKT: NGE) gives investors exposure to the largest and most liquid companies in Nigeria, but it also will invest in companies that derive a significant amount of revenues from Nigeria as well. This ETF will have gross expenses of 0.92% and net expenses of 0.68% and it tracks the Solactive Nigeria Index.
The Central Asia and Mongolia fund breaks down as 43.61% from Basic Materials, 37.24% from Energy, 9.5% from Financials, and 9.65% from Telecommunications. The country by country investing breakdown shows that Kazahkstan is the largest at 46.09%. That is followed by 14% from Russia, and 13.96% from Mongolia. Turkmenistan has a 5.90% weighting and the company/countries with under a 5% weighting are Canada, United Kingdom, Sweden, Kyrgyz Republic, and Tajikistan. Its key companies in the index (with weightings) are as follows:
KazMunaiGas Exploration Production, 10.32%
Kazakhmys PLC, 9.77%
Eurasian Natural Resources Corp PLC, 9.25%
Dragon Oil, 5.90%
Kcell JSC, 4.90%
Halyk Savings Bank of Kazakhstan, 4.75%
Zhaikmunai LP, 4.75%
Centerra Gold, 4.75%
Dundee Precious Metals Inc, 4.75%
Bank of Georgia Holdings PLC, 4.75%
Other, 36.11%
The Global X Nigeria Index ETF is listed as having 28 holdings and the industry weightings are Financials at 41.3%, followed by 24.32% from energy. The others are 13.13% in Consumer Discretionary, another 5.98% in Industrials, and 3.75% in Basic Materials. Its top holdings are as follows:
Guaranty Trust Bank, 8.59%
First Bank of Nigeria PLC, 7.84%
Zenith Bank PLC, 6.89%
Nigerian Breweries PLC, 6.37%
Saipem Spa, 4.50%
Subsea 7, 4.50%
TGS-Nopec Geophysical Co., 4.50%
United Bank for Africa PLC, 4.50%
Nestle Nigeria PLC, 4.50%
Access Bank PLC, 4.50%
Other, 43.31%
As far as why these economies matter, it boils down to money. Global X even gave a figure showing that the Economist Intelligence Unit has forecast 14% GDP growth in Mongolia and that this would make it the second highest growth on the planet. Global X also threw out there that Goldman Sachs recently included Nigeria as one of its “Next 11 Economies” that can offer large-scale growth and opportunity ahead.
Many investors want exposure to the emerging markets and many of them want exposure to the even more emerging markets call the frontier markets. The problem that always arises is that investing in these countries individually has been extremely difficult. Crime and corruption are just two key issues which come to mind, with revolutions and regime changes also being an obvious risk in many of the nations which would count as frontier markets.
Jon C. Ogg
Forget China! Think about the even more emerging part of Asia. The Global X Central Asia & Mongolia Index ETF (NYSEMKT: AZIA) will offer investors exposure to investing in foreign listings of Central Asian companies and the companies that derive significant revenues from the region. China has emerged as a key destination for many of the key resources of the region and it has been investing heavily on the energy and transportation infrastructure in the region. This ETF will have gross expense fees of 0.69% at the launch and it is based upon the Solactive Central Asia & Mongolia Index.
The Global X Nigeria Index ETF (NYSEMKT: NGE) gives investors exposure to the largest and most liquid companies in Nigeria, but it also will invest in companies that derive a significant amount of revenues from Nigeria as well. This ETF will have gross expenses of 0.92% and net expenses of 0.68% and it tracks the Solactive Nigeria Index.
The Central Asia and Mongolia fund breaks down as 43.61% from Basic Materials, 37.24% from Energy, 9.5% from Financials, and 9.65% from Telecommunications. The country by country investing breakdown shows that Kazahkstan is the largest at 46.09%. That is followed by 14% from Russia, and 13.96% from Mongolia. Turkmenistan has a 5.90% weighting and the company/countries with under a 5% weighting are Canada, United Kingdom, Sweden, Kyrgyz Republic, and Tajikistan. Its key companies in the index (with weightings) are as follows:
KazMunaiGas Exploration Production, 10.32%
Kazakhmys PLC, 9.77%
Eurasian Natural Resources Corp PLC, 9.25%
Dragon Oil, 5.90%
Kcell JSC, 4.90%
Halyk Savings Bank of Kazakhstan, 4.75%
Zhaikmunai LP, 4.75%
Centerra Gold, 4.75%
Dundee Precious Metals Inc, 4.75%
Bank of Georgia Holdings PLC, 4.75%
Other, 36.11%
The Global X Nigeria Index ETF is listed as having 28 holdings and the industry weightings are Financials at 41.3%, followed by 24.32% from energy. The others are 13.13% in Consumer Discretionary, another 5.98% in Industrials, and 3.75% in Basic Materials. Its top holdings are as follows:
Guaranty Trust Bank, 8.59%
First Bank of Nigeria PLC, 7.84%
Zenith Bank PLC, 6.89%
Nigerian Breweries PLC, 6.37%
Saipem Spa, 4.50%
Subsea 7, 4.50%
TGS-Nopec Geophysical Co., 4.50%
United Bank for Africa PLC, 4.50%
Nestle Nigeria PLC, 4.50%
Access Bank PLC, 4.50%
Other, 43.31%
As far as why these economies matter, it boils down to money. Global X even gave a figure showing that the Economist Intelligence Unit has forecast 14% GDP growth in Mongolia and that this would make it the second highest growth on the planet. Global X also threw out there that Goldman Sachs recently included Nigeria as one of its “Next 11 Economies” that can offer large-scale growth and opportunity ahead.
Many investors want exposure to the emerging markets and many of them want exposure to the even more emerging markets call the frontier markets. The problem that always arises is that investing in these countries individually has been extremely difficult. Crime and corruption are just two key issues which come to mind, with revolutions and regime changes also being an obvious risk in many of the nations which would count as frontier markets.
Jon C. Ogg
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