Although emerging markets ETFs have been struggling mightily for the past few months, some issuers still see opportunities for new offerings of developing world funds. The iShares MSCI Colombia Capped ETF (ICOL) , which debuts today, is a prime example.
The iShares MSCI Colombia Capped ETF becomes the third Colombia-specific ETF to list on a U.S. exchange and the first since the Market Vectors Colombia ETF (COLX) debuted in March 2011. The Global X FTSE Colombia 20 ETF (GXG) is the oldest and largest Colombia. GXG is more than four years old and has nearly $150 million in assets under management. [ETF Chart of the Day: Colombia]
The iShares offering could make inroads against its more established competitors because of its lower fees. ICOL will charge 0.61% per year compared to 0.68% for GXG and 0.75% on COLX.
ICOL will track the MSCI All Colombia Capped Index, which is a free-float adjusted market capitalization-weighted index. Home to 25 companies as of the end of April, the MSCI All Colombia Capped Index is designed so that no single stock can have a weight in excess of 25% and that all index members with weights above 5% cannot combine to exceed half the index’s weight, according to the fund’s SEC filing.
The filing does not list individual holdings, but chances are Ecopetrol (EC), Colombia’s state-controlled oil company, and Bancolombia (CIB), Colombia’s largest bank, will be found in the ETF’s top-10 holdings. Energy, financial services and materials names dominate the other two Colombia ETFs.
Last year, Colombia passed Argentina to become South America’s second-largest economy. Colombia is also the continent’s third-largest oil producer behind Venezuela and Brazil.
Other iShares Latin America ETFs include the iShares S&P Latin America 40 Index Fund (ILF), iShares MSCI Brazil Capped Index Fund (EWZ) and the iShares MSCI Mexico Capped Investable Market Index Fund (EWW).
Global X FTSE Colombia 20 ETF
ETF Trends editorial team contributed to this post.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.