New Colombia ETF Launched Today: GXG

February 6, 2009 by  
Filed under Commentary, ETF IPOs (New ETFs), ETFs

Global X/InterBolsa FTSE Colombia 20 ETF (GXG) is the first ETF to focus on Colombia and the first offering from Global X Management Company. As the name implies, this ETF will consist of stocks from the 20 companies in the FTSE Colombia 20 Index.

Today’s press release has a headline of “First Colombia ETF starts trading…” although no shares actually traded. The bid/ask spread was around 25 cents most of the day with a $15.44 bid and $15.69 ask near the close. The fact sheet (pdf) currently contains little information – no holdings, no sector composition, no information on index capping methodology.

The prospectus includes additional funds covering Argentina, Egypt, Peru, and the Philippines. It also highlights specific risks of investing in Colombia, including:

  • An economy heavily dependent on exports of oil, coal, and coffee to key trading partners of U.S., Brazil, and Mexico.
  • Colombia has experienced high interest rates, economic volatility, inflation, currency devaluations, and high unemployment rates.
  • Colombia has experienced a high level of debt and public spending, which may stifle economic growth, contribute to prolonged periods of recession, or lower the country’s sovereign debt rating.
  • Colombia has experienced periods of political instability, violence, and social unrest in the past.
  • Although levels of violence associated with internal conflicts and drug trafficking have fallen, they remain high by international standards.
  • In the recent past, Colombia has imposed stringent capital controls that have restricted the inflow and repatriation of capital and the free transfers of securities. These controls have since been eased but there can be no assurance that they will not be reinstated or changed again and without warning.
  • These capital controls could disrupt the creation/redemption process thereby adversely affecting trading of the Fund’s shares.

This one could be a tough sell: first ETF from a new ETF sponsor focusing on a small but risky area of the global market.

Disclosure: no positions

Comments

2 Responses to “New Colombia ETF Launched Today: GXG”

  1. Ron Rowland on March 5th, 2009 11:36 am

    There is a new and improved fact sheet now available for GXG:
    http://www.globalxfunds.com/FactSheets/FundFamily.pdf

  2. Armando Campo on March 24th, 2009 9:17 am

    Sincerely, these comments comes from the rusted, old, mislead approach to put down a country and a people who had suffered enough the black press of those with a hidden agenda.

    The fact is that Colombia is the third growing economy in the region, after Brazil and Chile. It has never in its 200 plus years of democratic institutions more strong, and despite there are still some issues in its socioeconomic development, it is a country with 75% of the population support for its government and their president.

    There is so much Colombians feel proud and this is one more reason. Business development is strong, FDI have increase, and the Colombian workforce is highly qualified.

    This is a quote from the FDI Magazine in regards to Colombia latest position in the economic landscape that speaks loud and clear what is truth and what is slam: The full article is found at: http://www.fdimagazine.com/news/fullstory.php/aid/1849/Colombia_comes_out_of_the_shadows.html

    If you are an investor with interest in the Latin American region, I encourage you to do your due diligence regarding the truth about Colombia and not let pass a good opportunity to invest in what is one of the highest and fastest economy South of the border.