The Global X Funds Andean 40 ETF was launched barely a month ago and isn’t high yet on many analyst radars (volume is also still low). The Andean 40 (AND) is worth examining for your portfolio because Peru, Chile and Colombia are some of the fastest growing economies in South America, whereas by now everyone already has some exposure to Brazil. The Latin America boom still has a ways to go, and you can likely enhance your potential for returns if you focus further on these economies, which typically get small (3-6%) exposure in the larger Latin American ETFs that focus mostly on Brazil and Mexico.
Global X FTSE Andean 40 ETF Facts
Inception: February 2, 2011
Ticker: AND (NYSE Arca)
Tracks: The FTSE Andean 40 Index.
Focus: 40 largest companies in Peru, Chile and Colombia.
Expense Fees: 0.72%
Country Weights: Chile, 49.23% – Colombia, 28.68% – Peru, 22.08%
Top 5 Sectors: Materials (28.35%), Financials (21.29%), Oil & Gas (14.70%), Consumer Services (12.89%), Utilities (12.53%)
It’s my view that South American economic growth is going to be hot, and it might be a good choice now at a time when the BRIC countries and emerging markets more generally are still slightly underbought given the recovery we’ve seen in the US and Europe. Good idea to be ahead of the curve and get higher exposure to the countries that get less attention than Brazil.*
Andean 40 ETF Top Ten Holdings
(as of March 8, 2011)
Southern Copper Corp. (NYSE: SCCO)
Buenaventura Mining Company Inc. (NYSE: BVN)
Ecopetrol S.A. (NYSE: EC)
Pacific Rubiales Energy (TSX: PRE)
BanColombia S.A. (NYSE: CIB)
Falabella Sociedad Anomina Comercial E Industrial (n/a)
Credicorp Ltd. (NYSE: BAP)
Empresas Copec SA (n/a)
National Electricity Company of Chile (NYSE: EOC)
Sociedad Quimeca y Minera de Chile (NYSE: SQM)
One thing to note about this ETF is that not all companies are necessarily Andean-owned, but may just do the majority of their operations there. This is the case with Pacific Rubiales, a Canadian company. Also, some of the largest holdings are not readily available on major markets (greyed out above), so they can be bought much more easily through an ETF such as this one.
*Disclosure: author owns a small long position in AND.
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