Global X Launches First Portugal ETF (PGAL)

by on November 15, 2013 | ETFs Mentioned:

Wall Street saw several record highs this week, as investors’ hopes for continued central bank stimulus efforts rose. Investors paid close attention to Fed Vice Chairwoman Janet Yellen, Obama’s nominee for the next chairman, as she faced questions from lawmakers at the Senate Banking Committee. In the hearing, Yellen emphasized the dangers associated with ending the Fed’s bond-buying program too soon, as well as too late. In economic news, initial jobless claims rose to 339,000 in the latest week, down from a revised 341,000 a week earlier. The U.S. trade deficit was reported to have widened to $41.8 billion, versus expectations of $39.1 billion [see The Best (And Worst) Performing ETFs For Every Quarter].

On the ETF front, investors welcomed yet another first-to-market product:

The First Portugal ETFPorto, Portugal

After launching its new Next Emerging & Frontier ETF (EMFM) last week, Global X debuted the first ever fund to focus specifically on Portuguese equities. The FTSE Portugal 20 ETF (PGAL) tracks the FTSE Portugal 20 Index, an index comprised of the top 20 companies that are domiciled in, principally traded in or whose revenues are primarily from Portugal. Stocks included in the index are screened for liquidity and weighted according to modified free-float market capitalization.

Currently, the fund offers exposure to several industries, including utilities, consumer services, financials, energy, and materials. PGAL’s top holding, which is allocated 20% of the fund’s total assets, is Energias de Portugal, S.A., (EDP), an integrated utility company. Other top holdings include Galp Energia SGPS SA, Jeronimo Martins, Banco Espirito Santo, and Sonae. PGAL’s expense ratio comes in at 0.61%, just below the average fees charged by other Global X ETFs [see Single Country ETFs: Everything Investors Need To Know].

The Case For Portugal

In its press release, Global X noted “There are a number of encouraging signs coming out of Portugal, and we believe the country is at an inflection point where the Portuguese economy is starting to find its footing,” meaning investors may want to take a closer look at this European country.

More than two years ago, Portugal was considered one of the “PIIGs,” after the country received a 78 billion euro bailout from the European Union and the International Monetary Fund. Now, analysts believe Portugal will finally generate positive GDP growth in 2014. The country is also expected to run a government surplus of roughly 3.5% in 2015, following the ending of the ECB’s aid program [see also How To Pick The Right ETF Every Time].

According to Global X research analyst Jay Jacobs, “As Europe continues its recovery from the sovereign debt crisis, we see a compelling opportunity for investors to obtain exposure to Portuguese equities.” And thanks to the team at Global X, investors can now gain fine-tuned and affordable exposure to the promising country.

Follow me on Twitter @DPylypczak.

Disclosure: No positions at time of writing.