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Leaders League

First ETF launched on Lima Stock Exchange


The first exchange traded fund (ETF) has been launched on the Lima Stock Exchange (BVL), structured by US-based fund manager VanEck and Peruvian financial advisor El Dorado Investments. The ETF is valued at between $300-500 million.

ETFs are a type of fund traded on stock markets that package bonds and shares into one publicly-listed vehicle, allowing investors to trade stock and securities across a variety of industries, and are known for their relatively low cost and simple fee structures.

Buying and selling an ETF is akin to trading a stock, and ETFs are purpose-built, aimed at either providing exposure to asset classes that are underrepresented in investor portfolios or offering a different approach to established investment categories.

ETFs span many global asset classes and are built to be transparent, liquid, and pure-play reflections of targeted markets. The value of the funds’ portfolio is often indexed in line with the performance of a particular sector or market.

The ETF aims to invest in some of Peru’s most important industries, with 48% of the fund’s holdings targeting the mining sector, while 31% of its investments are in the finance space and a further 21% in the consumer and retail industry.

The ETF vehicle is also linked to tax benefits. Certain companies that trade on Lima’s stock exchange are exempt from capital gains tax if they transfer no more than 10% of their shares to the fund within a 12-month period. Meanwhile, local and international investors in Peruvian ETF funds pay a reduced levy of 5% on proceeds raised through the vehicle.

VanEck was advised on the placement by local law firms Rubio Leguía Normand and Rebaza Alcázar & De Las Casas, with the latter also advising El Dorado Investments.

Rubio Leguía Normand’s team that worked on the consultancy to VanEck was led by partner Carlos Arata and included associate Germán Gómez, while Rebaza Alcázar & De Las Casas’ team comprised partner Camilo Maruy and associate Víctor Valdez.

“It is an honor to have worked with a company with the stature of VanEck, one of the largest investment management firms in the world,” Rubio Leguía Normand’s partner Carlos Arata said.

“Furthermore, we are proud to mark a milestone in the history of the Peruvian capital market by participating in this operation which, we hope, will be the first [of many],” he added.

VanEck aims to grow its Latin American presence with this innovative fund, which it says will, for the first time, provide a single-entry point for investors to access some of the most high-performing companies on Peru’s stock market across a broad spectrum of industries.

First founded in 1955, VanEck now holds some US$69 billion worth of assets under management. It provides asset management services, such as managing and setting up ETFs, mutual funds and investment vehicles, among others.

Lima-headquartered El Dorado Investments structures funds and manages asset portfolios too. It provides advisory services to pension funds, insurance companies and other businesses in Chile, Colombia and Mexico, as well as in Peru.

Article publised in Leaders League

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Carlos Arata