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

See How International Business Machines Ranks Among Analysts' Top Dow 30 Picks
Wed, Aug 24, 11:54 AM ET, by ETF Channel

A study of analyst recommendations at the major brokerages shows that International Business Machines Corp. ...

MDY, MTD, IDXX, WWAV: Large Outflows Detected at ETF
Wed, Aug 24, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: MDY, MTD, IDXX, WWAV Exchange traded funds (ETFs) trade just ...

FM Crosses Below Key Moving Average Level
Wed, Aug 24, 11:14 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares MSCI Frontier 100 ETF (FM) crossed below ...

PSK, HSEB, PNC.PRP, USB.PRM: Large Outflows Detected at ETF
Wed, Aug 24, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: PSK, HSEB, PNC.PRP, USB.PRM Exchange traded funds (ETFs) trade just ...

RXI, MCD, TWX, TJX: ETF Inflow Alert
Wed, Aug 24, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: RXI, MCD, TWX, TJX Exchange traded funds (ETFs) trade just ...

AGQ Crowded With Sellers
Wed, Aug 24, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the ProShares Ultra Silver ETF (AGQ) entered into oversold ...

SLV Crosses Critical Technical Indicator
Wed, Aug 24, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares Silver Trust ETF (SLV) entered into oversold ...

ETFS Physical Silver Shares Getting Very Oversold
Wed, Aug 24, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the ETFS Physical Silver Shares ETF (SIVR) entered into ...

PowerShares DB Silver Fund Getting Very Oversold
Wed, Aug 24, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the PowerShares DB Silver Fund ETF (DBS) entered into ...

Five9 Reaches Analyst Target Price
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of Five9, Inc (FIVN) have crossed above the average analyst 12-month ...

PBYI Crosses Above Average Analyst Target
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of Puma Biotechnology, Inc. (PBYI) have crossed above the average analyst ...

Rexnord Reaches Analyst Target Price
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of Rexnord Corp (RXN) have crossed above the average analyst 12-month ...

Nordson Reaches Analyst Target Price
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of Nordson Corp. (NDSN) have crossed above the average analyst 12-month ...

LZB Crosses Above Average Analyst Target
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of La-Z-Boy Inc. (LZB) have crossed above the average analyst 12-month ...

ASML Crosses Above Average Analyst Target
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of ASML Holding NV (ASML) have crossed above the average analyst ...

ANGI Crosses Above Average Analyst Target
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of Angie's List Inc. (ANGI) have crossed above the average analyst ...

CLVS Crosses Above Average Analyst Target
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of Clovis Oncology Inc (CLVS) have crossed above the average analyst ...

Medidata Solutions Reaches Analyst Target Price
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of Medidata Solutions, Inc. (MDSO) have crossed above the average analyst ...

F5 Networks Reaches Analyst Target Price
Wed, Aug 24, 8:14 AM ET, by ETF Channel

In recent trading, shares of F5 Networks, Inc. (FFIV) have crossed above the average analyst ...

Delphi Automotive Moves Up In Analyst Rankings, Passing Allegion
Tue, Aug 23, 1:24 PM ET, by ETF Channel

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

See How Exxon Mobil Ranks Among Analysts' Top Dow 30 Picks
Tue, Aug 23, 1:24 PM ET, by ETF Channel

A study of analyst recommendations at the major brokerages shows that Exxon Mobil Corp. (XOM) ...

IGV, MSFT, ORCL, ADBE: ETF Outflow Alert
Tue, Aug 23, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IGV, MSFT, ORCL, ADBE Exchange traded funds (ETFs) trade just ...

LABU: ETF Outflow Alert
Tue, Aug 23, 10:54 AM ET, by ETF Channel

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

BWX: ETF Outflow Alert
Tue, Aug 23, 10:54 AM ET, by ETF Channel

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

A10 Networks Reaches Analyst Target Price
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of A10 Networks Inc (ATEN) have crossed above the average analyst ...

Equity Lifestyle Properties Reaches Analyst Target Price
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Equity Lifestyle Properties Inc (ELS) have crossed above the average ...

ROCK Crosses Above Average Analyst Target
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Gibraltar Industries Inc (ROCK) have crossed above the average analyst ...

ISIL Crosses Above Average Analyst Target
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Intersil Corp. (ISIL) have crossed above the average analyst 12-month ...

IRT Crosses Above Average Analyst Target
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Independence Realty Trust Inc (IRT) have crossed above the average ...

APH Crosses Above Average Analyst Target
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Amphenol Corp. (APH) have crossed above the average analyst 12-month ...

Dunkin' Brands Group Reaches Analyst Target Price
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Dunkin' Brands Group Inc (DNKN) have crossed above the average ...

HYH Crosses Above Average Analyst Target
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Halyard Health Inc (HYH) have crossed above the average analyst ...

Finisar Reaches Analyst Target Price
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Finisar Corp (FNSR) have crossed above the average analyst 12-month ...

Apigee Reaches Analyst Target Price
Tue, Aug 23, 8:14 AM ET, by ETF Channel

In recent trading, shares of Apigee Corp (APIC) have crossed above the average analyst 12-month ...

Daily Financial Bear 3x Shares Getting Very Oversold
Mon, Aug 22, 3:54 PM ET, by ETF Channel

In trading on Monday, shares of the Daily Financial Bear 3x Shares ETF (FAZ) entered ...

Molson Coors Brewing Moves Up In Analyst Rankings, Passing Berkshire Hathaway
Mon, Aug 22, 11:54 AM ET, by ETF Channel

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

FPE, CHSCN, CTV, UZC: ETF Inflow Alert
Mon, Aug 22, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: FPE, CHSCN, CTV, UZC Exchange traded funds (ETFs) trade just ...

XMLV, RNR, AFG, RE: ETF Inflow Alert
Mon, Aug 22, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XMLV, RNR, AFG, RE Exchange traded funds (ETFs) trade just ...

XLV, MDT, ABBV, AGN: ETF Inflow Alert
Mon, Aug 22, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XLV, MDT, ABBV, AGN Exchange traded funds (ETFs) trade just ...

RWM Crowded With Sellers
Mon, Aug 22, 11:14 AM ET, by ETF Channel

In trading on Monday, shares of the ProShares Short Russell2000 ETF (RWM) entered into oversold ...

TZA Crosses Critical Technical Indicator
Mon, Aug 22, 11:14 AM ET, by ETF Channel

In trading on Monday, shares of the Daily Small Cap Bear 3x Shares ETF (TZA) ...

EWP: ETF Outflow Alert
Mon, Aug 22, 11:14 AM ET, by ETF Channel

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

IJR, PNY, TTWO, BGS: ETF Inflow Alert
Mon, Aug 22, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IJR, PNY, TTWO, BGS Exchange traded funds (ETFs) trade just ...

15.8% of XTN Holdings Seeing Recent Insider Buys
Mon, Aug 22, 9:54 AM ET, by ETF Channel

A look at the weighted underlying holdings of the SPDR S&P Transportation ETF (XTN) shows ...

Monster Worldwide Reaches Analyst Target Price
Mon, Aug 22, 8:14 AM ET, by ETF Channel

In recent trading, shares of Monster Worldwide Inc (MWW) have crossed above the average analyst ...

Advanced Energy Industries Reaches Analyst Target Price
Mon, Aug 22, 8:14 AM ET, by ETF Channel

In recent trading, shares of Advanced Energy Industries Inc. (AEIS) have crossed above the average ...

WEX Crosses Above Average Analyst Target
Mon, Aug 22, 8:14 AM ET, by ETF Channel

In recent trading, shares of Wex Inc (WEX) have crossed above the average analyst 12-month ...

DeVry Education Group Reaches Analyst Target Price
Mon, Aug 22, 8:14 AM ET, by ETF Channel

In recent trading, shares of DeVry Education Group Inc (DV) have crossed above the average ...

BHLB Crosses Above Average Analyst Target
Mon, Aug 22, 8:14 AM ET, by ETF Channel

In recent trading, shares of Berkshire Hills Bancorp, Inc. (BHLB) have crossed above the average ...

PVH Crosses Above Average Analyst Target
Mon, Aug 22, 8:14 AM ET, by ETF Channel

In recent trading, shares of PVH Corp (PVH) have crossed above the average analyst 12-month ...

  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.