Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

What Are Italian Stocks Doing In The Argentina ETF?

Tue, Nov 6, 8:15 AM ET, by Michael Johnston

With lackluster earnings and substantial political uncertainty in the U.S. and European markets leaving many investors unimpressed, the recent trend of investing in emerging and frontier markets figures to continue for the foreseeable future. As investors shed their home country bias and look to beef up the international allocations in their portfolios, many are exploring economies that were previously hard to access. Thanks in large part to the ETF boom, investors of all levels of wealth and sophistication have the ability to invest in markets around the world. Emerging markets are no longer limited to the major players of the BRIC; there are country-specific ETFs targeting everything from Colombia to the Philippines to Vietnam [try Free ETF Country Exposure Tool].

When evaluating foreign ETFs, many investors have noticed that the composition of the underlying portfolio doesn’t quite match up with what they might have expected. For example, the Global X Argentina ETF (ARGT, C+) has only about 75% of its holdings are companies based in Argentina. The other quarter is spread between Canadian, Chilean, and American investments that have some operation in Argentina [see Seven Surprising ETF Holdings].

That might seem strange–and even suspicious–but it’s simply a nuance of international equity ETFs. Below, we take a deeper dive into ARGT to explain why the country allocations you see on many international ETFs might not make immediate sense.

As Argentina has opened its economy, many companies headquartered elsewhere in the world have rushed in to invest in the abundance of natural resources and other assets. As a result, many of the companies that operate primarily in Argentina are actually headquartered thousands of miles away–often on an entirely different continent–and have their primary listing on an exchange far from Buenos Aires. The result doesn’t necessarily diminish the correlation to the local Argentinian markets–these stocks often react to the local economy–but it does produce a puzzling country allocation [see Latin America ETFdb Portfolio].

Natural Gas and Oil

As the largest natural gas producer in Latin America, many Canadian companies that feel the northern markets are over saturated have ventured south in search of better returns. As a key player in oil production in Latin America, Argentina used to export a fair amount of excess oil to Brazil. However, consumption is quickly catching up with production, now requiring the import of oil which makes up a third of the oil used annually. This shift has created even more interest from northern companies that have more advanced and efficient refining and production methods [see also ETFs To Play 9 Markets in Limbo].

Tenaris SA is a large manufacturer of piping for oil and gas pipelines, and has major operations in Argentina. But the company is actually headquartered in Luxembourg and shows up in the portfolio breakdown as an Italian stock since it’s listed on the Borsa Italiana.

Tenaris is the largest individual holding in ARGT at almost 19% of total assets.

Retail

Many of the Latin American retail companies operate outside of their home country, including Cencosud, the Chilean solution to Walmart. With Jumbo stores around Latin America, this shopping super center might as well call Argentina home since it now has more locations here than in Chile. This might partly be due to the fact that Argentina has nearly triple the population of Chile and Cencosud bought out all of its Argentinian rivals, but as the third largest retailer, it still has to fight with Brazilian Groupo Pao de Acucar and Mexican Walmart de Centroamerica for consumers [see ETFs For The World's Most Valuable Emerging Market Brands].

Cencosud, which makes up about 4% of ARGT, accounts for the Chilean components of this ETF.

Precious Metals

The majority of foreign investments in Argentina are interested in mining and refining of metals like gold, silver, copper, and aluminum. While it is not one of the largest metal producing countries, Argentina is right next to Chile where many Canadian and American corporations have already set up shop and are expanding quickly looking for new opportunities. It may not have the amazing copper reserves of Chile, but Argentina is the 3rd largest global producer of boron, a metal used in glass, detergents, industrial magnets, and when combined with carbon create a highly durable compound that is used in the making of bulletproof vests [see also Everything You Need To Know About Frontier ETFs].

A handful of Canadian and U.S. mining companies, including Pan American Silver, Yamana Gold, Silver Standard Resources, and Goldcorp are found in the ARGT’s portfolio as they have substantial operations in the country.

Bottom Line: Nothing To Fret About

Though we highlighted ARGT, that fund is certainly not the only international equity ETF that consists of stocks that appear to be from other markets. The Russia ETF (RSX, B-) appears to have components from the U.K. and the Netherlands. The Vietnam ETF (VNM, C+) has components listed primarily in Thailand, Canada, Malaysia, and India. Even SPY technically has minor allocations to Switzerland and Ireland.

There are hardly any companies existing now that operate exclusively in one country; most generate revenue on multiple continents and in dozens of nations. In an increasingly interconnected global economy, sometimes the best way to get exposure to Argentina is through a company headquartered in Canada or Luxembourg.

[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]

Disclosure: No positions at time of writing.

Click here to read the original article on ETFdb.com.


SDI Glossary: "ETFs" Definition
This Article's Word Cloud:   ARGT   America   American   Argentina   Canadian   Cencosud   Chile   Chilean   ETFdb   ETFs   Emerging   Latin   Silver   This   Vietnam   allocations   companies   components   copper   country   economy   from   global   have   headquartered   home   including   international   investments   investors   largest   listed   many   markets   might   mining   more   only   operate   operations   other   portfolio   production   quickly   stocks   that   their   third   used   with

| More

Mondelez International Moves Up In Analyst Rankings, Passing Red Hat
Thu, Feb 11, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

IWP Crowded With Sellers
Thu, Feb 11, 11:44 AM ET, by ETF Channel

In trading on Thursday, shares of the iShares Russell Mid-Cap Growth ETF (IWP) entered into ...

IJR Crosses Critical Technical Indicator
Thu, Feb 11, 11:44 AM ET, by ETF Channel

In trading on Thursday, shares of the iShares Core S&P Small-Cap ETF (IJR) entered into ...

PFF Crowded With Sellers
Thu, Feb 11, 11:44 AM ET, by ETF Channel

In trading on Thursday, shares of the iShares U.S. Preferred Stock ETF (PFF) entered into ...

SPDR S&P 600 Small Cap Growth (SLYG) Enters Oversold Territory
Thu, Feb 11, 11:44 AM ET, by ETF Channel

In trading on Thursday, shares of the SPDR S&P 600 Small Cap Growth ETF (SLYG) ...

SPDR S&P Insurance (KIE) Enters Oversold Territory
Thu, Feb 11, 11:44 AM ET, by ETF Channel

In trading on Thursday, shares of the SPDR S&P Insurance ETF (KIE) entered into oversold ...

REZ Crosses Critical Technical Indicator
Thu, Feb 11, 11:44 AM ET, by ETF Channel

In trading on Thursday, shares of the iShares Residential Real Estate Capped ETF (REZ) entered ...

EFV Crosses Critical Technical Indicator
Thu, Feb 11, 11:44 AM ET, by ETF Channel

In trading on Thursday, shares of the iShares MSCI EAFE Value ETF (EFV) entered into ...

SPDR Dow Jones REIT (RWR) Enters Oversold Territory
Thu, Feb 11, 11:44 AM ET, by ETF Channel

In trading on Thursday, shares of the SPDR Dow Jones REIT ETF (RWR) entered into ...

iShares U.S. Real Estate Getting Very Oversold
Thu, Feb 11, 11:35 AM ET, by ETF Channel

In trading on Thursday, shares of the iShares U.S. Real Estate ETF (IYR) entered into ...

PowerShares Fundamental High Yield Corporate Bond Portfolio Getting Very Oversold
Thu, Feb 11, 11:35 AM ET, by ETF Channel

In trading on Thursday, shares of the PowerShares Fundamental High Yield Corporate Bond Portfolio ETF ...

Vanguard Information Technology ETF Experiences Big Outflow
Thu, Feb 11, 11:35 AM ET, by ETF Channel

Symbols mentioned in this story: VGT, TEL, GLW, HPQ Exchange traded funds (ETFs) trade just ...

Vanguard Mega Cap Growth (MGK) Enters Oversold Territory
Thu, Feb 11, 11:35 AM ET, by ETF Channel

In trading on Thursday, shares of the Vanguard Mega Cap Growth ETF (MGK) entered into ...

The Math Shows IJJ Can Go To $130
Thu, Feb 11, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Add Up The Parts: IYR Could Be Worth $83
Thu, Feb 11, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

How The Pieces Add Up: HDV Targets $81
Thu, Feb 11, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Implied IWO Analyst Target Price: $170
Thu, Feb 11, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

IWN's Underlying Holdings Could Mean 27% Gain Potential
Thu, Feb 11, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Shares of IPAC Now Oversold
Wed, Feb 10, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares Core MSCI Pacific ETF (IPAC) entered into ...

Shares of HEWJ Now Oversold
Wed, Feb 10, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares Currency Hedged MSCI Japan ETF (HEWJ) entered ...

Shares of EWJ Now Oversold
Wed, Feb 10, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI Japan ETF (EWJ) entered into oversold ...

BLV: ETF Inflow Alert
Wed, Feb 10, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: BLV Exchange traded funds (ETFs) trade just like stocks, but ...

DIA, GS, BA, UNH: Large Inflows Detected at ETF
Wed, Feb 10, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: DIA, GS, BA, UNH Exchange traded funds (ETFs) trade just ...

IWD, AIG, MDLZ, WBA: Large Outflows Detected at ETF
Wed, Feb 10, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: IWD, AIG, MDLZ, WBA Exchange traded funds (ETFs) trade just ...

QID: ETF Inflow Alert
Wed, Feb 10, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: QID Exchange traded funds (ETFs) trade just like stocks, but ...

SCPB: ETF Outflow Alert
Wed, Feb 10, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: SCPB Exchange traded funds (ETFs) trade just like stocks, but ...

SPLV, PSA, XL, CB: Large Inflows Detected at ETF
Wed, Feb 10, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: SPLV, PSA, XL, CB Exchange traded funds (ETFs) trade just ...

VTI: Large Inflows Detected at ETF
Wed, Feb 10, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: VTI Exchange traded funds (ETFs) trade just like stocks, but ...

FDM's Holdings Imply 24% Gain Potential
Wed, Feb 10, 9:34 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

We Did The Math FTY Can Go To $51
Wed, Feb 10, 9:34 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Add Up The Pieces: BIZD Could Be Worth $19
Wed, Feb 10, 9:34 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts See 32% Gains Ahead For EMIF
Wed, Feb 10, 9:34 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

YCS Crowded With Sellers
Tue, Feb 9, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the ProShares UltraShort Yen ETF (YCS) entered into oversold ...

RXI Crowded With Sellers
Tue, Feb 9, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the iShares Global Consumer Discretionary ETF (RXI) entered into ...

See How United Technologies Ranks Among Analysts' Top Dow 30 Picks
Tue, Feb 9, 12:14 PM ET, by ETF Channel

A study of analyst recommendations at the major brokerages shows that United Technologies Corp (UTX) ...

VFC Achieves #71 Analyst Rank, Surpassing Laboratory Corporation of America Holdings
Tue, Feb 9, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

FXG, STZ, HRL, DPS: ETF Outflow Alert
Tue, Feb 9, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: FXG, STZ, HRL, DPS Exchange traded funds (ETFs) trade just ...

IWV, IBM, WMT, BMY: Large Outflows Detected at ETF
Tue, Feb 9, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: IWV, IBM, WMT, BMY Exchange traded funds (ETFs) trade just ...

PowerShares Variable Rate Preferred Portfolio (VRP) Enters Oversold Territory
Tue, Feb 9, 11:24 AM ET, by ETF Channel

In trading on Tuesday, shares of the PowerShares Variable Rate Preferred Portfolio ETF (VRP) entered ...

Shares of PGF Now Oversold
Tue, Feb 9, 11:24 AM ET, by ETF Channel

In trading on Tuesday, shares of the PowerShares Financial Preferred Portfolio ETF (PGF) entered into ...

iShares Global Financials (IXG) Enters Oversold Territory
Tue, Feb 9, 11:14 AM ET, by ETF Channel

In trading on Tuesday, shares of the iShares Global Financials ETF (IXG) entered into oversold ...

MTUM, HD, LLY, TWC: ETF Inflow Alert
Tue, Feb 9, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: MTUM, HD, LLY, TWC Exchange traded funds (ETFs) trade just ...

XT Crosses Critical Technical Indicator
Tue, Feb 9, 11:14 AM ET, by ETF Channel

In trading on Tuesday, shares of the iShares Exponential Technologies ETF (XT) entered into oversold ...

HDV, MO, SE, XEL: ETF Inflow Alert
Tue, Feb 9, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: HDV, MO, SE, XEL Exchange traded funds (ETFs) trade just ...

Implied PXLG Analyst Target Price: $39
Tue, Feb 9, 8:24 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

IAK's Holdings Could Mean 19% Gain Potential
Tue, Feb 9, 8:24 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Implied EPS Analyst Target Price: $76
Tue, Feb 9, 8:24 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Sum Up The Parts: USLB Could Be Worth $27
Tue, Feb 9, 8:24 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

FAB's Underlying Holdings Imply 27% Gain Potential
Tue, Feb 9, 8:24 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Analysts Expect 20% Gains Ahead For The Holdings of IWX
Tue, Feb 9, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

What Are Italian Stocks Doing In The Argentina ETF? | Self Directed Investor | Copyright © 2008 - 2016, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of serious individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.