Emerging markets have been under fire, but the financial markets have to plan for the day when markets are stable and things are normal again. Now exchange traded fund (ETF) investors have yet another emerging market economy that can be played via ETFs. BlackRock Inc. (NYSE: BLK) has launched the iShares MSCI Colombia Capped ETF (NYSE: ICOL). Note that this is not the only Colombia ETF that exists, but it will offer investors another method for participating in the growing Latin American nation.
Two other key Colombia ETFs exist. The first we track is the Global X FTSE Colombia 20 ETF (NYSEMKT: GXG), and there is also the much less traded Market Vectors Colombia ETF (NYSEMKT: COLX). Does it seem odd that BlackRock would introduce a new Colombian exchange ETF at a time when the others are hitting 52-week lows?
The iShares MSCI Colombia Capped ETF is designed to track the MSCI All Colombia Capped Index, which includes companies that are headquartered or listed in Colombia and have the majority of their operations based in Colombia.
BlackRock’s statement calls Colombia the ‘new Brazil’ for the nation’s growth possibilities and the opportunities in the smaller nations in Latin America. The IMF data referenced showed that Colombia has the third largest population among Latin and South American countries with a higher realized GDP growth than Brazil due to demand for oil, natural gas and coal. Colombia is also shown to have strong fiscal management, declining debt, positive global trade trends, and “business-friendly economic policies focused on deregulation.”
No single index entity is allowed to exceed 25% of the index weighting and all group entities with weights above 5% cannot exceed 50% of the index weight. As of May 29, 2013, the largest sector weightings of the index included financials (34.17%), energy (31.58%) and utilities (14.99%).
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