Argentina, once South America’s second-largest economy, is contending with its third sovereign debt default in less than 30 years and its second this century.
The latest default is predictably pressuring the Global X FTSE Argentina 20 ETF (NYSEArca: ARGT). ARGT, the lone Argentina ETF, is off 6.1% in the past month. However, ARGT still maintains a double-digit year-to-date gain and some investors are finding opportunities in Argentine equities despite the latest sovereign default.
Inflows into ARGT “have pushed total assets to about $36 million, according to data compiled by Bloomberg, report Boris Korby and Jenna M. Dagenhart for the newswire. About 60,000 shares, or $1.3 million, of the ETF changed hands daily over the last 30 days, Bloomberg reported.
ARGT had $34.6 million in assets under management as of Aug. 6, according to Global X data. That is up $1 million from July 30, the day Argentina officially defaulted. [Argentina ETF Shrugs Off Default Woes]
Last month, Third Point’s Dan Loeb said he believes Argentina will reach an agreement with its creditor and noted he is bullish on YPF (NYSE: YPF). The energy company is ARGT’s second-largest holding at a weight of nearly 12%.
Other hedge funds are snatching up shares of Argentine companies, as well. According to regulatory filings, the hedge funds have acquired holdings in U.S.-listed Argentine shares, including YPF S.A. (NYSE: YPF), Petrobras Argentina, Telecom Argentina and Banco Frances.
Earlier this year, Michael Novogratz, president of Fortress Investments, suggested that Argentina was one of their countries seen as “so bad, they’re good,” pointing to a potential buying opportunity in the event of a default. [Hedge Funds Race Into Argentine Stocks]
In addition to ARGT, 22 other ETFs have exposure to Argentina. With a 14.4% to the country, the Guggenheim Frontier Markets ETF (NYSEArca: FRN) has the next largest Argentina exposure after ARGT. ARGT is expected to transition to an index from MSCI later this month.
Global X FTSE Argentina 20 ETF
