Van Eck Global has launched Market Vectors Latin America Small-Cap Index ETF (LATM), the first U.S.-listed ETF designed to give investors exposure to small-cap stocks in Latin America. The Fund’s net expense ratio is 0.63% percent.
Latin America’s gross domestic product (GDP) has grown at an average of 4.6 percent annually since 2005 and is expected to continue expanding at a rate in excess of that of the G-71 industrialized nations, according to the International Monetary Fund. Additionally, Latin America small-cap stocks are supported by a fast-growing middle class and rising domestic consumption.
LATM seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Latin America Small-Cap Index which uses a float-adjusted modified market capitalization weighting methodology.
Van Eck believes that the country weightings in LATM’s underlying index more closely reflect the percentage contribution each country makes to regional GDP than competing indices for the region. For example, the index’s Brazil allocation of approximately 43 percent as of March 31, 2010, more accurately reflects Brazil’s share of Latin America’s GDP, which is approximately 40 percent. Other Latin America indices have Brazil allocations of over 60 percent.
Including offshore components, seven countries are currently represented in the index, with Brazil having the largest weighting, followed by Mexico, Chile, Peru, Colombia, Argentina and Ecuador. Offshore companies are eligible for inclusion in the Index, provided that they generate at least 50 percent of their revenues in Latin America.
The Index currently has 81 components. Constituent companies must have a market cap of at least $150 million, a three-month average daily trading volume value of at least $1 million and minimum trading volume of 250,000 shares each month over the last 6 months on a rebalancing date.
The top three industry weightings in the Index as of March 31, 2010 are Materials (26 percent), Consumer Discretionary (23 percent) and Industrials (14 percent).
For more ETF investing choices, see the list of international ETFs.