If you’ve ever wanted a way to access Colombia via an exchange traded fund (ETF), your day has finally arrived.
New ETF provider Global X launched the Global X/InterBolsa FTSE Colombia 20 (GXG), a first of its kind. The fund will consist of 20 components in the FTSE Colombia 20 Index.
This fund apparently is the first of several from the new provider that will launch. Other funds in registration target Peru, Argentina, Egypt and the Philippines. There currently are no ETFs that focus solely on these markets.
Global X is aware of the risks of investing in Colombia, a nation known for political instability. Although violence has been decreasing since 2002, insurgents still continue their attacks and large areas remain under guerrilla influence, according to the CIA World Factbook.
Other risks it notes in the prospectus include:
- Its exports are dependent on oil, coal and coffee, and changes in these commodities can have a significant impact on Colombia’s economy
- Central and South American countries, including Colombia, are experiencing high interest rates, economic volatility, inflation, high unemployment and currency devaluations
- Colombia has a high level of debt and public spending, which threatens to crimp economic growth
On the plus side, however:
- Colombia, however, has been expanding at a rate of 6% per year in 2006 and 2007, mostly on advancements in domestic security
- The growth has helped lower poverty by 20% and unemployment by 25% since 2002
- Exporters have worked to diversify their cusomer base away from the United States and Venezuela, the country’s largest trading partners
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.