Well, there is finally an ETF for most of the countries ending
And for Mongolia, too. On the same day Global X
introduced the first Nigeria ETF
, the firm also unveiled the Global X Central Asia & Mongolia
Index ETF (NYSE:
With Wednesday's debut, the Global X Central Asia &
Mongolia Index ETF is now officially the first ETF to offer
investors ample exposure to resource-rich nations such as
Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan,Turkmenistan, and
Investors should note the Solactive Central Asia &
Mongolia Index, AZIA's underlying index, "is comprised of
companies that are domiciled in, principally traded in or whose
revenues are primarily from Mongolia, Kazakhstan, Kyrgyzstan,
Tajikistan, Turkmenistan, and Uzbekistan,"
according to Global X
Translation: AZIA has some surprising country allocations. The
14 percent allocated to Russia, making that nation the
second-largest weight in the new ETF behind the 46.1 percent
heaped on Kazakhstan, probably is not surprising. The 4.75
percent each for Canada, Sweden and the U.K. might be a surprise
At the sector level, AZIA is what investors would expect it to
be. Materials and energy names comprise almost 81 percent of the
ETF's weight. Financials garner a weight of 9.5 percent, but that
is 4.75 percent each to two banks - Halyk Savings Bank of
Kazakhstan and Bank of Georgia. Those two stocks are top-10
holdings in the new ETF, but the rest of that lineup is energy
and materials names.
And that makes sense as AZIA's constituent countries are
producers of copper, gold, natural gas, oil and silver, among
other hard assets.
"The International Monetary Fund forecast GDP growth of 5.5%
in 2013 for energy-exporting Central Asian countries, while the
Economist Intelligence Unit predicted that Mongolia will grow its
GDP by nearly 14% this year, the second highest growth rate of
according to Global X
Of course, proximity to China looms large when it comes to
investing in Central Asia. China "ecently opened a $962 million
railway with Kazakhstan through the Korgas Pass - analysts expect
the trade route to transport 20 million tons of cargo per year by
2020," Global X noted, citing the Economic times.
Like the Global X Nigeria Index ETF (NYSE:
) that also debuted on Wednesday, AZIA is a primarily a play on
frontier, not, emerging markets. While that may be perceived as
increased risk, frontier markets
have low correlations to U.S. stocks
and, in some cases, surprisingly low betas.
Of AZIA's constituent countries, Kazakhstan certainly has one
trait that investors should not gloss over. That being a $56
billion sovereign wealth fund that could possibly swell to $100
billion by 2015. Sovereign wealth funds are an often
under-appreciated element of investing in global
but they have helped bolster ETFs such as those
tracking Chile and Norway
whether investors realize it or not.
Home to 22 stocks, AZIA is top heavy with the 10 largest
holdings accounting for nearly two-thirds of the fund's weight.
The new ETF charges an annual expense ratio of 0.68 percent,
which makes it slightly cheaper than the largest China ETF.
For more on ETFs, click
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