Global X Funds, the New York-based provider of exchange-traded funds (ETFs), today launched the Global X Next Emerging & Frontier ETF (NYSE Arca: EMFM). This new product will provide investors with access to 35 countries exhibiting high growth potential …
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and favorable demographical trends that may stimulate their rise as economic powers. Importantly, the index does not include equities from the BRIC countries (Brazil, Russia, India, and China) and other, more advanced economies like South Korea or Taiwan.
The Global X Next Emerging & Frontier ETF tracks the Solactive Next Emerging & Frontier Index and has exposure to attractive economies such as the Philippines, Nigeria, Chile, Panama, Pakistan and the Czech Republic. Countries included in the index represent 24% of the world’s population, but just 12% of the world’s gross domestic product and 8% of the world’s equity market cap.
Based on the young populations present in these countries, Global X expects these countries to generate more competitive labor forces that likely will become the world’s major supplier of low-cost labor. The firm also expects these countries to provide low correlations to both developed markets and each other, since they are driven by domestic-focused sectors including agriculture, construction and local banking. The index incorporates a capping mechanism to ensure diversification across sectors and individual countries.
“The Next Emerging & Frontier ETF offers exposure to specific economies that we expect will experience a long period of high growth rates, similar to what the BRIC nations experienced over the past 15 years,” said Bruno del Ama, chief executive officer of Global X Funds. “Investing in emerging markets continues to be an important strategy for portfolio diversification and growth, but investors must now look beyond more mature economies to regions with accelerating growth rates and expanding populations. This is because ‘traditional’ emerging market investments have begun to slow down and are too closely correlated with developed markets.”
“While emerging and frontier markets may provide ample opportunity for growth, many individual countries and regions are concentrated in particular sectors and have only a handful of liquid names,” added Justin Young, Head of Capital Markets. “The Next Emerging & Frontier ETF was designed specifically to address these challenges by providing broad exposure to 35 countries and utilizing caps and liquidity thresholds in an effort to ensure diversified, high quality holdings.”
EMFM complements the Global X suite of frontier and targeted emerging market ETFs, which includes the Global X Colombia ETF (GXG) and Global X Nigeria Index ETF (NGE).
Source: ETFWorld
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