The First Nigeria And Central Asia ETFs

Includes: AZIA, NGE
by: Tom Lydon

The emerging markets are known for their risk and potential rewards, and investors who are willing to take on a little more risk could take a look at Global X's new frontier market exchange traded funds.

The Global X Nigeria Index ETF (NYSEARCA:NGE) and the Global X Central Asia & Mongolia Index ETF (NYSEARCA:AZIA) began trading Wednesday, April 2.

Frontier markets have less advanced capital markets and are less established than the developing economies. The pre-emerging group of frontier markets provide investors with potentially high returns, but they come with added risks, such as political and economic instability, liquidity issues, poor financial regulation and currency risks, among others.

NGE will try to reflect the performance of the Solactive Nigeria Index, which tracks companies domiciled in, principally traded in or whose revenues are primarily from Nigeria. The ETF has a 0.68% expense ratio and includes 28 component holdings.

Top holdings include Guaranty Trust Bank 8.6%, First Bank of Nigeria 7.6%, Zenith Bank 6.9%, Nigerian Breweries 6.4% and Saipem Spa 4.5%.

Sector allocations include financials 41.3%, energy 24.3%, consumer discretionary 13.1%, consumer staples 11.5%, industrials 6.0% and basic materials 3.8%.

Nigeria is the large country on Africa by population, with 63% under the age of 25, and the largest oil producer on the continent, according to Global X. Moreover, Nigeria is undergoing pro-market reforms and has attracted the largest foreign direct investment in Africa.

AZIA tries to reflect the performance of the Solactive Central Asia & Mongolia Index, which tracks companies domiciled in, principally traded in or whose revenues are primarily from Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The ETF has a 0.69% expense ratio.

Sector allocations include basic materials 43.6%, energy 37.2%, financials 9.5% and telecom services 9.7%.

Country allocations include Kazakhstan 46.1%, Russia 14.0%, Mongolia 14.0%, Turkmenistan 5.9%, Canada 4.8%, U.K. 4.8%, Sweden 4.8%, Kyrgyz Republic 4.8% and Tajikistan 1.1%.

The central Asia region is rich with natural resources, with countries exporting oil, copper, gold, silver, coal, uranium and cotton, according to a separate Global X report. Particularly, trade growth between central Asia and China has been expanding, and China has been increasing infrastructure spending to link the area.

Max Chen contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.