ETF Launches by Van Eck, Invesco and Global X Focus on Pure-Play Markets

Colombia, Mexico, gold miners and equities feature as niche players in latest ETF launches

The race to launch exchange traded funds into new markets continued this week as Van Eck, Invesco and Global X all ventured into ETFs that cover Colombia, Mexico, gold miners and oil equities.

“Pure play” was the theme as Van Eck Global launched its Global Market Vectors Colombia ETF (NYSE Arca : COLX), Invesco PowerShares announced plans to expand its geographic coverage through a series of cross-listings in Mexico, and Global X Funds launched both the Global X Pure Gold Miners ETF (NYSE Arca: GGGG) and the Global X Oil Equities ETF (NYSE Arca: XOIL).

Van Eck’s COLX, launched Tuesday, seeks to replicate, before fees and expenses, the price and yield performance of 4AssetManagement’s Market Vectors Colombia Index (MVCOLXTR). The pure-play index includes local companies domiciled and listed on the Colombian exchange, as well as offshore companies that derive the majority of their revenues in the country.  As of March 10, 74% of the equities in the index were local Colombian companies.

Invesco PowerShares Capital Management announced Monday its geographic expansion plan through a series of cross-listings in Mexico. Effective March 11, 38 PowerShares ETFs have been cross-listed on the international segment of Bolsa Mexicana de Valores (BMV), adding to 10 existing products that were trading in Mexico before these new cross-listings.

Global X Funds also on Tuesday launched GGGG and XOIL. The launches are the latest of the ETF issuer’s global commodity funds and are aimed at giving investors a purer play in gold and oil equities by following the Solactive Indexes.

In explaining its strategy for the COLX launch, Van Eck officials noted that Colombia is South America’s second largest country, the world’s third-largest Spanish-speaking nation by population and a beneficiary of strong commodity price trends that have resulted in improved exports and credit expansion. Market Vectors ETFs have been offered by Van Eck since 2006 when the firm launched a gold mining ETF.

“Colombia’s commodity-based economy appears poised to experience growth in both trade and foreign direct investment,” said Allison Lovett, Van Eck’s marketing vice president, in a statement. “The merger of the Colombian stock exchange with Peru’s exchange may further strengthen the country’s position.”

Invesco PowerShares appointed local divisions of Deutsche Bank and J.P. Morgan as sponsoring brokers to cross-list the ETFs on the Bolsa Mexicana de Valores. The ETFs trade through Mexican Depository Receipts denominated in pesos, and the sponsoring brokers service all corporate actions including disseminating shareholder information in the Mexican market. The sponsors have representatives available in Mexico to provide local expertise to investors.

“With the addition of these new cross-listings, Invesco PowerShares is now the second largest provider of ETFs in Mexico by number of funds,” said Bryon Lake, senior product manager at Invesco PowerShares, in a statement.

The goal of the Global X Pure Gold Miners ETF is to provide investors with relatively easy access to companies that get the majority of their revenues from gold mining, according to a company news release. The Global X Oil Equities ETF, meanwhile, was developed to include only companies with the highest correlation to oil prices and thus provide exposure to pure-play oil companies with significant oil reserves.

 “Unlike other indexes such as the NYSE Arca Gold Mining Index, which actually includes several silver miners, over 95% of the revenues from the companies in the Solactive Index are derived from gold mining.  The Global X Pure Gold Miners ETF is a global fund, providing access to gold mining companies listed on exchanges all over the world,” the release said.

Read about Morningstar’s report on ETFs topping the $1 trillion mark in February at AdvisorOne.com.

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