Well, there is finally an ETF for most of the countries ending in "-stan."
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 AZIA.
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 Uzbekistan.
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 to some.
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 any country," 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 NGE 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 ETFs, 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 here.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.