Global X Funds today launched two exchange-traded funds that offer investors a deeper dive into frontier emerging markets––the Global X Nigeria Index ETF (NGE) and the Global X Central Asia & Mongolia Index ETF (AZIA). The company says both are first-of-its-kind ETFs for their targeted regions.
Based in New York City, Global X specializes in ETFs that target specific corners of the investing universe based on what the company believes are long-term secular trends that will help shape the world over the next 10 years. Its lineup of 35 passively managed, index-based ETFs offers a healthy dose of products tied to emerging markets and commodities. The Nigerian and Central Asia/Mongolia ETFs fit into those themes.
The Global X Nigeria Index ETF sports an expense ratio of 0.68 percent (for at least the first year) and tracks the Solactive Nigeria Index, a free-float market capitalization index comprising 28 companies that are either based in, principally traded in or do the bulk of their business in Nigeria.
According to the World Bank, Nigeria is Africa’s most populous country (roughly 160 million people, with almost two-thirds of them younger than 25) and is the continent’s biggest oil exporter and holds its largest natural gas reserves.
The Solactive Nigeria Index targets six sectors. The largest weightings are in financials (41.3 percent) and energy (24 percent), with smaller yet sizable weightings in consumer discretionary (13 percent) and consumer staples (12 percent).
Goldman Sachs has named Nigeria as one of its “Next 11” group of fast-growing nations it believes could greatly impact the global economy. The World Bank reports that Nigeria has undertaken various pro-market reforms and has become a leading player in African affairs.
Despite Nigeria’s potentially bright economic future, the country comes with some caveats including widespread poverty, unequal wealth distribution and ethnic strife. Nigeria has been bedeviled by Muslim extremists in the north and by repeated attacks and thefts against oil pipelines in the southern region's Niger Delta.
According to a story in the trade publication Platts, Nigeria's finance minister said last year that the country loses one-fifth of its revenue to theft, while the International Energy Agency reports that Nigeria loses $7 billion a year to oil theft.
The Global X Central Asia & Mongolia Index ETF aims to tap into that region’s growing role as an exporter of oil, copper, gold, silver, coal, zinc, lead, uranium, cotton and wheat.
The fund charges gross expenses of 0.69 percent and tracks the Solactive Central Asia & Mongolia Index, a free-float market capitalization index comprising 22 companies that are either based in, principally traded in or do the bulk of their business in Mongolia and the “Stans”––Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Russia also plays a role in this ETF.