ASEAN Social Culture Community

ASEAN ~ Global X's New ASEAN ETF : NEW YORK (TheStreet) - The flurry of new ETFs continues with the Global X ASEAN 40 ETF(ASEA_).

If you are unfamiliar with the acronym it stands for Association of Southeast Asian Nations which includes 10 countries although only Singapore, Malaysia, Indonesia, Thailand and the Philippines are captured in the fund. The fund only having five countries is probably a function of markets like Cambodia and Laos being too small.

By country, the largest holdings in the fund are from Singapore at 41%, followed by Malaysia, 33%; Indonesia, 15%; Thailand, 10%; and peculiarly 0.61% in the Philippines with a position in Philippine Long Distance. The fund is market-cap weighted with stakes in the 40 largest stocks in the region. Calling it the ASEAN 39 ETF would be odd, but this really is just a four-country fund, which is not necessarily a bad thing.

At the sector level the fund allocates 43% to financials, 15% to telecom and 15% to industrials. The largest holdings are targeted at 4% to 5% each and include mostly Singaporean banks like DBS Group Holdings and Oversea Chinese Banking along with Singapore Telecom. 

While there is no yield information available at the Global X Website the iShares MSCI Singapore Index Fund(EWS_) has yielded over 3% and the iShares MSCI Malaysia Index Fund(EWM_) has yielded over 2.5%. The yield for ASEA should also be in that range. 

The countries in the fund are all available as individual country ETFs, so the value here would be not having to be correct about one country, accessing a fundamentally healthy slice of Asia while avoiding Japan and China which for the time being have more risk factors. Note "for the time being" as these countries were ground zero for the Asian Contagion in 1998 and Thailand has had some political issues lately that could linger even though this is now not front page news. 

Part of the attraction to this region is that it came through the financial crisis fundamentally unscathed and is today on firmer economic ground than much of the world. While that is clearly the case this did not prevent these markets from going down just as much as the S&P 500 during the worst of the crisis.