From the April 2010 issue of Research Magazine • Subscribe!

Van Eck Launches Egypt ETF

Other firms roll out China infrastructure and developed countries products.

Van Eck Global has added the Market Vectors Egypt Index ETF (EGPT) to its fund lineup. The move came amid a flurry of international offerings by various providers.

"The Market Vectors Egypt Index ETF addresses a growing interest in using individual country funds to calibrate international equity allocations, particularly on the part of investors dissatisfied with existing indices," said Jan van Eck, principal at Van Eck Global. "These funds serve as targeted tools for overweighting or underweighting specific geographies and economies."

EGPT's underlying index tracks the performance of companies that are domiciled and primarily listed in Egypt, or that generate a majority of their revenues in the country. At the end of January, the Egypt Index included 28 stocks and the top three index holdings were Commercial International Bank, Orascom Construction Industries and Orascom Telecom Holding SAE. EGPT is heavily tilted toward companies in the financial, industrial, materials and telecom sectors.

Egypt's real economic growth has averaged 4.9 percent annually since the start of the last decade and 6.3 percent for the three years ending Dec. 31, 2009. Egypt's move to a more open, market-oriented economy has led to expanding foreign investment, net exports, industrial development and business formation. Egypt is the most populous Arab country and the third most populous country in Africa.

The index uses a market-capitalization weighting methodology, and is float-adjusted and modified so that the weight of any single component does not account for more than eight percent of the total capitalization at a rebalancing date. It is denominated in U.S. dollars and reviewed quarterly.

Van Eck manages other country-focused ETFs like Africa (AFK), Brazil Small-Cap (BRF), Poland (PLND), Russia (RSX) and Vietnam (VNM). The New York-based company manages around $12 billion in ETF assets.

More Offerings

Emerging Global Advisors (EGA) has just debuted the China Infrastructure Index Fund (CHXX). The fund is comprised of 30 Chinese infrastructure stocks and has annual expenses of 0.85 percent.

EGA is planning more ETFs with a similar investment theme, including infrastructure funds that follow stocks in Asia, Brazil and India. At the end of January, the company had $61 million under management.

Old Mutual Global Index Trackers, a South Africa-based fund manager introduced its second U.S. listed ETF, the GlobalShares FTSE Developed Countries ex-US Fund (GSD).

GSD offers market exposure to 23 developed countries, including Canada, Japan, the United Kingdom, France and Germany without overlapping their U.S. stock portfolios. The fund is benchmarked to the FTSE Developed ex-US Index, which is comprised of over 1,400 stocks. GSD's annual net expense ratio after fee waivers is 0.35 percent.

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