On Tuesday, two new members will be joining the fast growing exchange traded fund (ETF) family. IndexIQ is launching two new ETFs – one is targeting Canada’s small-cap companies and the other is targeting Australia’s small-cap companies.
Canada. Canada’s growth could be supported by small-caps, buoyed by strong global demand for energy. The country is rich in natural resources with 29 billion barrels of conventional oil reserves and 151 billion barrels of oil sands reserve, totaling 180 billion barrels, or second only to Saudi Arabia. Canada is also a net exporter of oil and natural gas – it produces more than it consumes. [ETF Spotlight: EWC.]
Canada has the second-largest proven crude reserves globally, and it’s the second-largest exporter of natural gas globally and the fourth-largest exporter of crude oil globally.
IQ Canada Small Cap ETF (NYSE Arca: CNDA). CNDA tries to reflect the performance of the IQ Canada Small Cap Index, which seeks to provide investor with the means to track the overall performance of small-cap Canadian firms. The fund has 100 holdings and has an expense ratio of 0.69%.
Half the fund is made up of materials, followed by energy (18.8%), financials (6.5%) and industrials (5.7%).
Australia. Australia was basically unfazed by the recession, only experiencing one quarter of GDP contraction, and the country was the first G-20 nation to tighten interest rates. Economists project that Australia’s economy will return to a 3.75% growth rate in 2010 as export demand and mining recovers. [Australia on a Roll; 4 ETFs to Play It.]
Australia is the fourth-largest producer of coal globally and fourth-largest producer of gold globally. The country is also one of the top 10 exporters to China and its share of exports to China is quickly growing.
IQ Australia Small Cap ETF (NYSE Arca: KROO). KROO tries to reflect the performance of the IQ Australia Small Cap Index, which seeks to provide investors with the means to track the overall performance of small-cap Australian companies. The fund has 100 holdings and has an expense ratio of 0.69%.
Materials and consumer discretionary make up the biggest portion of the fund, at 26.9% and 24.6%, respectively. Industrials are 10.7% and financials are 10.2%.
For more information on new ETFs, visit our new ETFs category.
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.