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Global X Funds launches first Mexico small-cap ETF


Small-cap stocks generally receive the majority of their revenues from the domestic economy in which they are located.  The Global X Mexico Small-Cap ETF is designed to give investors exposure to Mexico’s domestic growth story, with an emerging middle class and positive developments in manufacturing and service industries.

Investors in the fund may stand to benefit from Mexico’s growing consumers. According to a Morgan Stanley report, in the fourth quarter of 2010, Mexico’s 4.6% economic growth rate was driven almost entirely by domestic demand. These consumers have a per-capita income twice as large as Brazil’s, which translates into greater purchasing power and a strong domestic services sector (Reuters, 2011). The country has expected economic growth of about 4% in 2011, combined with inflation of about 3.5%.  This compares well to regional peers, many of which are tightening monetary policy to fend off surging prices (Reuters, 2011).

"MEXS provides an efficient way to play Mexico’s domestic growth story. Improvement in Mexico’s terms of trade with the US, its largest trading partner, has helped to increase investment in domestic industries," says Bruno del Ama, chief executive officer of Global X Funds.

The Global X Mexico Small-Cap ETF tracks the Solactive Mexico Small-Cap Index, which is designed to measure equity market performance of small-market capitalization companies in Mexico. As of May 3, 2011, the three largest components of the index were Megacable Holdings, GrupoComercialChedraui SA, and Grupo Continental SAB.

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