New York-based asset manager Van Eck Global has launched Market Vectors Colombia ETF (NYSE:COLX), a new exchange-traded fund (ETF) designed for investors seeking direct, targeted exposure to Colombian equities.
“Investors have long looked to emerging markets for short- and long-term growth opportunities. However, in making their emerging market allocations investors are looking beyond BRIC nations, which in recent history have been among the most popular destinations for investor dollars,” said Jan van Eck, principal with Van Eck Global. “With that in mind, we’re pleased to offer investors a way to access the domestic equity performance of Colombia, a country with significant commodity production capabilities, a recent track record of substantial political reform, and rapidly developing cross-border and cross-exchange cooperation with its neighbors which could spur positive momentum for both that country and the Andean region as a whole.”
COLX seeks to replicate, before fees and expenses, the performance of the Market Vectors Colombia Index (MVCOLXTR), created by 4AssetManagement. MVCOLXTR is a “pure play” index that not only includes local companies domiciled and listed on the Colombian exchange, but also offshore companies that derive the majority of their assets (revenues) in the country. As of March 10, 2011, approximately 74 percent of the equities in the Index were local Colombian companies, while the remainder were listed offshore. The comprehensive nature of the Index, combined with its weighting caps, leads to greater diversification by sector and market cap. Its 27 holdings are made up of approximately 51 percent large-cap equities, 36 percent mid-cap equities, and 13 percent small-caps. As of March 10, the largest sector weightings were Financials (33 percent), Energy (30 percent), and Materials (17 percent). [Transparent, daily index information is available on the Van Eck Global website.]
Colombia is South America’s second largest country and the world’s third largest Spanish-speaking nation by population. A beneficiary of strong commodity price trends, the country has enjoyed improved exports and credit expansion. Fiscal reforms and reduced government debt under former President Alvaro Uribe have opened the country to international investment. GDP growth, led by domestic consumption, was estimated at 4.7% (GDP, %YoY) for 2010 and is anticipated to be approximately 4.6% in 2011.
“Colombia’s commodity-based economy appears poised to experience growth in both trade and foreign direct investment,” adds Allison Lovett, Vice President of Marketing at Van Eck Global. “And the merger of the Colombian stock exchange with Peru’s exchange may further strengthen the country’s position among regional capital markets.”
Van Eck Global notes that investing in emerging markets is not without its risks, which can include economic and political instability, pricing concerns on local exchanges, low trading volume and more, all of which are issues that an investor must consider.
COLX carries a competitive net expense ratio of 0.75 percent and a gross expense ratio of 0.97 percent and joins Van Eck Global’s family of international ETFs, which also includes funds focused on Africa (NYSE:AFK), Brazil Small-Cap (NYSE:BRF), China (NYSE:PEK), Egypt (NYSE:EGPT), the Gulf States (NYSE:MES), India Small-Cap (NYSE:SCIF), Indonesia (NYSE:IDX), Latin America Small-Cap (NYSE:LATM), Poland (NYSE:PLND), Russia (NYSE:RSX) and Vietnam (NYSE:VNM).
About Van Eck Global
Founded in 1955, Van Eck Global was among the first U.S. money managers helping investors achieve greater diversification through global investing. Today the firm continues this 55+ year tradition by offering global investment choices in hard assets, emerging markets, precious metals including gold, and other specialized asset classes.
Van Eck Global also offers mutual funds, insurance portfolios, separate accounts and alternative investments. Designed for investors seeking innovative choices for portfolio diversification, Van Eck Global’s investment products are often categorized in asset classes having returns with low correlations to those of more traditional U.S. equity and fixed income investments.
In addition, Market Vectors exchange-traded products have been offered by Van Eck Global since 2006 when the firm launched the nation’s first gold mining ETF. Today, Market Vectors ETFs and ETNs span several asset classes, including equities, municipal bonds and currency markets. Market Vectors is currently the U.S.’s sixth largest provider of ETPs.
Investors should be willing to accept a high degree of volatility and the potential of significant loss. The Fund is subject to risks associated with investments in derivatives and foreign securities. In particular, Colombian investments are subject to elevated risks, which include, among others, high interest rates, economic volatility, inflation, currency devaluations, high unemployment rates, commodity price volatility, and adverse economic events in other South American countries. In general, foreign investments are subject to greater market volatility, less reliable financial information, higher transactional costs, taxation, decreased liquidity, political risks, and currency risk. The Fund may loan its securities, which may subject it to additional credit and counterparty risk.
Market Vectors Colombia Index (the “Index”) is the exclusive property of 4asset-management GmbH, which has contracted with Structured Solutions AG to maintain and calculate the Index. Structured Solutions AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards 4asset-management GmbH, Structured Solutions AG has no obligation to point out errors in the Index to third parties. Market Vectors Colombia ETF (the “Fund”) is not sponsored, endorsed, sold or promoted by 4asset-management GmbH and 4asset-management GmbH makes no representation regarding the advisability of investing in the Fund.
Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called “creation units” and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in cash. Shares may trade at a premium or discount to their NAV in the secondary market.
Investing involves risk, including possible loss of principal. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing. To obtain a prospectus or summary prospectus, which contains this and other information, call 888.MKT.VCTR or visit vaneck.com/etf. Please read the prospectus and summary prospectus carefully before investing.
Van Eck Securities Corporation, Distributor, 335 Madison Avenue, New York, NY 10017
Mike MacMillan/Chris Sullivan