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S&P Dow Jones Indices has licensed the S&P MILA 40 Index to Horizons ETFs to serve as the basis for an exchange-traded fund listed in Colombia.
The ETF, known locally as the Fondo Bursátil Horizons MILA 40 de S&P (HMILA40), will be listed on the Bolsa de Valores de Colombia (BVC) and will be the first Andean equity focused ETF available in Colombia.
The S&P MILA 40 Index, launched in 2011, was the first in a series of indices for Latin America’s second-largest market. The index gauges the returns of the largest and most liquid stocks trading on the Mercado Integrado Latinoamericano (MILA) platform, an integrated trading venture formed by the Chile, Colombia and Peru stock exchanges.
MILA has a market capitalization of $672 billion, second to Brazil’s BM&F Bovespa, which has a market capitalization of $1.2 trillion, and ahead of Mexico’s Bolsa Mexicana de Valores with $525 billion. By number of listings, MILA (514) is the largest trading venue in Latin America, ahead of BM&F Bovespa (353) and Bolsa Mexicana de Valores (131).
The index consists of the largest 40 stocks based on float-adjusted market capitalization, subject to certain eligibility criteria and weighting caps. To be eligible for inclusion, stocks must have a float-adjusted market capitalization above $100 million and a three-month average daily value traded (ADVT) in their local markets above $250,000 as of the rebalancing reference date. At rebalancing, constituent weights are adjusted so that no country can have a weight of more than 50% in the index and no single stock weight can be larger than 8%.
As of September 30, 2013, the largest sector weights were financials with 30.0%, followed by energy (17.5%), utilities (14.6%), materials (12.9%) and consumer staples (11.4%). The largest individual constituents were Ecopetrol, SACI Falabella, Credicorp, Empresas COPEC and Pacific Rubiales Energy. The top ten holdings made up 48.0% of the index. The index is rebalanced twice a year in March and September.
Alka Banerjee, Managing Director of Global Equity Indices at S&P Dow Jones Indices, said: “We are pleased to license the S&P MILA 40 Index to Horizons ETFs. As growth and development of the Andean equity markets continue, the S&P MILA 40 Index provides a transparent and relevant benchmark for this important region of the world.”
Howard Atkinson, Managing Director of Horizons ETFs Management (LATAM) and Global Head of Sales and Marketing for the Horizons ETFs Group, added: “We’re very pleased to expand our global partnership with S&P Dow Jones Indices. This is the second international market we’ve entered where the first ETF we launched has replicated an S&P index. The S&P MILA 40 Index offers a way for investors to follow the tremendous growth potential of the MILA region.”
The new fund has a management fee of 0.60%.