Global X Plans Auto And Farming ETFs
March 23, 2011
Global X, the New York-based ETF company known for its niche funds, filed paperwork with U.S. regulators to market globally focused equities ETF, one canvassing the auto sector and the other the farming industry.
Global X has been on a roll in the past year, serving up ETFs that offer unique approaches to what the company sees as relatively unexplored niches of the market. Its equity products tap into everything from individual countries, to gold and oil, to materials and sectors. The approach has yielded $1.5 billion in assets in less than two years.
In the prospectus it filed with the Securities and Exchange Commission this week, Global X didn’t specify planned tickers or fees for its planned Global X Global Auto ETF and the Global X Farming ETF.
The company did say that both funds, which would track their respective indexes through replication strategies and trade on the New York Stock Exchange’s electronic platform Arca, might rely on derivatives—including options, futures and swap contracts—to achieve their investment strategies.
Auto Industry Fund
The auto ETF will track the performance of an S-Network Global Indexes benchmark that invests in global companies directly involved with the auto industry. That includes firms producing cars, auto parts, tires or any other related product. The index is a rules-based, modified-capitalization-weighted, float-adjusted benchmark that invests in companies deriving more than 50 percent of their revenues from the auto sector.
Only companies with a market capitalization exceeding $3 billion would be considered for inclusion, and they would also need to have a three-month average daily turnover greater than $1 million, the company said in the filing. The benchmark is rebalanced quarterly.
Farming Sector Fund
The farming ETF will track a Solactive global farming index, managed by Germany-based Structured Solutions AG, and will comprise stocks as well as American depositary receipts and global depositary receipts of companies around the world engaged in agri-product and livestock operations; or in manufacture, sale or distribution of farming products, the filing said.
The farming fund’s indexing methodology screens for liquidity, and securities are weighted according to free-float market capitalization, while a “specific capping methodology” is applied at the semiannual rebalance to ensure diversification, the company said.