Global X to Launch Nigeria, Mongolia ETFs
NYSE Euronext has announced that two new Global X ETFs would begin trading on Wednesday, April 3: the Global X Nigeria Index ETF (NGE) and the Global X Central Asia & Mongolia Index ETF (AZIA).
Both funds will track indexes comprised of 25 stocks, with the AZIA drawing from Kazakhstan,Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, along with Mongolia.
Of course, these are frontier markets and they’re called that for a reason. Here’s what I wrote about frontier markets generally on Feb. 9 in Barron’s.
There’s the outsized growth, sure, but that comes with higher-than-average risks. Most frontier-market stocks trade infrequently, are expensive to enter and exit, and come with idiosyncratic factors that can cause markets to plunge or freeze up completely. It’s not a bet for the faint of heart—or an easy market to play. “It makes sense to have some exposure,” says David Romhilt, head of manager research for the Americas at Barclays in New York. “But there are real risks in the space.”
Read the funds’ prospectuses for a discussion of those risks. My favorite comes from the Nigeria ETF.
Cash Transactions Risk: Unlike most ETFs, the Fund expects to effect a portion of its creations and redemptions for cash, rather than in-kind securities. As a result, an investment in the Fund may be less tax-efficient than an investment in a more conventional ETF.
Both funds will track indexes comprised of 25 stocks, with the AZIA drawing from Kazakhstan,Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, along with Mongolia.
Of course, these are frontier markets and they’re called that for a reason. Here’s what I wrote about frontier markets generally on Feb. 9 in Barron’s.
There’s the outsized growth, sure, but that comes with higher-than-average risks. Most frontier-market stocks trade infrequently, are expensive to enter and exit, and come with idiosyncratic factors that can cause markets to plunge or freeze up completely. It’s not a bet for the faint of heart—or an easy market to play. “It makes sense to have some exposure,” says David Romhilt, head of manager research for the Americas at Barclays in New York. “But there are real risks in the space.”
Read the funds’ prospectuses for a discussion of those risks. My favorite comes from the Nigeria ETF.
Cash Transactions Risk: Unlike most ETFs, the Fund expects to effect a portion of its creations and redemptions for cash, rather than in-kind securities. As a result, an investment in the Fund may be less tax-efficient than an investment in a more conventional ETF.
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