New York-based asset manager Van Eck Global has launched Market Vectors Germany Small-Cap ETF (NYSE Arca: GERJ), the first exchange-traded fund (ETF) designed to give investors pure-play exposure to Europe’s largest economy.
The German economy is the fourth largest in the world as measured by gross domestic product (GDP). The country has bounced back quickly from the worldwide recession, expanding at an annual rate of 3.6 percent in 2010, with unemployment declining to its lowest rate since 1992. A substantial portion of the country’s economy is made up of small companies that have a history of dominating highly specialized industry sectors such as machine tools, auto parts, printing presses, and electrical equipment. Many of these companies are significant exporters, allowing Germany to maintain its share of world trade over the past decade. The rapidly growing countries of Asia comprise Germany’s second-largest export market.
“The German economy has rebounded quite strongly from the global economic downturn and appears well positioned to continue to expand,” said Jan van Eck, principal at Van Eck Global. “With its history of innovation and niche market strengths, the country’s small-cap sector may continue to benefit from strong export-driven demand as well as domestic consumption. Our new ETF gives investors a focused vehicle for gaining exposure to this vibrant segment of the German economy.”
Fund to Track Market Vectors Index
GERJ seeks to replicate, before fees and expenses, the performance of the Market Vectors Germany Small-Cap Index (MVGERJTR). Market Vectors indexes are designed to more fully reflect the fundamental dynamics of investing in local market economies. Constituent requirements include liquidity based on minimum levels of market capitalization and daily trading volume; local market exposure, with at least 50 percent of revenues generated from a country, even if the company is listed, domiciled, or headquartered elsewhere; diversification1 based on a tiered weighting scheme; and transparency, with constituents and weights updated and published daily.
As of March 8, 2011, the Market Vectors Germany Small-Cap Index was comprised of 95 companies with an average market capitalization of $US1.2 billion. The largest sector weightings were Industrials (approximately 35 percent), IT (16 percent), and Consumer Discretionary (15 percent). [Transparent daily index information is available on the company’s website.]
GERJ carries a net expense ratio of 0.55 percent and a gross expense ratio of 0.63 percent and joins Van Eck’s family of international ETFs, which also includes funds focused on Africa (AFK), Brazil small-caps (BRF), China (PEK), Colombia (COLX), Egypt (EGPT), the Gulf States (MES), India small-caps (SCIF), Indonesia (IDX), Latin America small-caps (LATM), Poland (PLND), Russian large-caps (RSX) and Vietnam (VNM).
Van Eck’s Market Vectors family of ETFs, which also include funds focused on commodities, municipal bonds, and emerging market local currency bonds, had approximately $31.3 billion in assets under management (AUM) as of December 31, 2010, making it the sixth-largest provider of ETFs in the United States and ninth-largest in the world.
About Van Eck Global
Founded in 1955, Van Eck Global was among the first U.S. money managers helping investors achieve greater diversification through global investing. Today the firm continues this 55+ year tradition by offering global investment choices in hard assets, emerging markets, precious metals including gold, and other specialized asset classes.
Van Eck Global also offers mutual funds, insurance portfolios, separate accounts and alternative investments. Designed for investors seeking innovative choices for portfolio diversification, Van Eck Global’s investment products are often categorized in asset classes having returns with low correlations to those of more traditional U.S. equity and fixed income investments.
In addition, Market Vectors exchange-traded products have been offered by Van Eck Global since 2006 when the firm launched the nation’s first gold mining ETF. Today, Market Vectors ETFs and ETNs span several asset classes, including equities, municipal bonds and currency markets.
1 The Fund is classified as a “non-diversified” investment company under the 1940 Act.
Investors should be willing to accept a high degree of volatility and the potential of significant loss. The Fund is subject to risks associated with investments in derivatives and foreign securities. In particular, German investments are subject to elevated risks, which include, among others, dependence upon trade partners, volatility and/or negative changes in surrounding European countries, changes to EU regulations or interest rates, political, social and regulatory risks. In addition, companies with small capitalizations are subject to elevated risks, which include, among others, greater volatility, lower trading volume and less liquidity than larger companies. The Fund may loan its securities, which may subject it to additional credit and counterparty risk.
The Market Vectors Germany Small-Cap Index (the “Index”) is the exclusive property of 4asset-management GmbH, which has contracted with Structured Solutions AG to maintain and calculate the Index. Structured Solutions AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards 4asset-management GmbH, Structured Solutions AG has no obligation to point out errors in the Index to third parties. Market Vectors Germany Small-Cap ETF (the “Fund”) is not sponsored, endorsed, sold or promoted by 4asset-management GmbH and 4asset-management GmbH makes no representation regarding the advisability of investing in the Fund.
Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called “creation units” and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market.
Investing involves risk, including possible loss of principal. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 888.MKT.VCTR or visit vaneck.com/etf. Please read the prospectus and summary prospectus carefully before investing.
Van Eck Securities Corporation, Distributor, 335 Madison Avenue, New York, NY 10017