Brocker.Org: Another Argentina ETF Comes to Town


There are multiple single-country exchange-traded funds (ETFs) for Brazil and Mexico. Even Colombia. So perhaps an addition to the stable of Argentina ETFs will prove successful. Time will tell for the iShares MSCI Argentina and Global Exposure ETF (AGT), which debuted Thursday. The iShares MSCI Argentina and Global Exposure ETF will compete directly with the Global X MSCI Argentina ETF (ARGT). The Global X MSCI Argentina ETF is the legacy Argentina ETF, having come to market over six years ago. Both ETFs track the MSCI All Argentina 25/50 Index. The newly minted iShares ETF holds 25 stocks, according to issuer data.

“Argentina is one of the most interesting stories of all developing economies as the government continues to re-establish economic normalcy and open its local financial system,” said BlackRock, Inc. (BLK) emerging markets portfolio manager Gerardo Rodriguez in a statement. “As the second largest economy in South America, Argentina is in the process of regaining its long held status as a potentially attractive investment destination.” (See also: Is Argentina a Socialist Country?)

Brazil is South America’s largest economy, while Argentina is currently classified as a frontier market by the index provider. That designation is reserved for countries viewed as more rough around the economic and political edges than emerging markets. As a result of its market classification, Argentina is not part of the widely followed MSCI Emerging Markets Index. However, that condition could be only temporary, as MSCI has Argentina on review for possible upgrade to emerging markets status when the index provider’s annual classification review takes place in a few weeks. If that promotion happens, that will stoke buying of Argentine stocks by managers that benchmark to the MSCI Emerging Markets Index, likely boosting AGT and ARGT in the process.

AGT’s underlying index allocates over 30 percent of its weight to energy stocks, which makes sense because Argentina has some of Latin America’s largest natural gas reserves. Technology and financial services stocks combine for over 34 percent of the ETF’s weight.

A new political regime in Argentina has “implemented market-friendly reforms, such as the the elimination of the capital lock-up period for investments and the monthly repatriation limits on equity markets. Furthermore, Argentina has removed most of its currency controls to allow the peso to trade freely, which has helped the export industry be more competitively priced in global markets,” according to ETF Trends.

AGT charges 0.59 percent per year, or 15 basis points below the rival ARGT. (See also: 3 Ways You Can Invest in Argentina From the U.S.)