ETF Launch: Colombia ETF… Really (GXG, EC, CIB)

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Exchange Traded Funds have been going through some changes. New ETF’s are coming to market while others are de-listing because of lack of interest.  Today is marking the launch of an ETF that will allow US investors the first public exchange traded vehicle to get exposure to Columbia.  Global X Management Company and Colombian broker InterBolsa S.A.Comisionista de Bolsa have launched the Global X/InterBolsa FTSEColombia 20 ETF (NYSE: GXG).  You can probably imagine all the jokes that will be coming for this one, but the Colombian market has for all practical purposes been unavailable to US investors.

This is an NYSE-Arca listed ETF whichseeks to provide investment results that correspond generally to theprice and yield performance of the FTSE Colombia 20 Index.

This index is comprised of a basket of the 20 most liquid securities inthe Colombian market.  It is weighted by free-float adjusted marketcapitalization and employs a capping methodology to facilitateregulatory compliance with U.S. investment company tax diversificationrules. The index is also compiled by FTSE Group.

The index includes companies such as oil firm Ecopetrol, banking groupBancolombia, food manufacturer Chocolates, cement producer CementosArgos, and utility firm Interconexion Electrica.

If you search through the ADR list of JPMorgan at ADR.com you will findthat there are hardly even any ADR’s for Colombian stocks which US investors can easilytrade.  Ecopetrol SA (NYSE: EC) trades, but it trades less than 40,000shares on average per day and it frequently sees less than 10,000shares in a day.  Bancolombia S.A. (NYSE: CIB) does trade more activelyas an ADR, with average volume of over 400,000 shares per day.  Therest of the ADR’s look like they are Pink Sheet stocks and veryilliquid.

Jon C. Ogg
February 6, 2009