Global X Launches New International Small and Mid-Cap ETF

Global X ETFs has launched a new exchange-traded fund targeting international small and mid-cap companies, responding to growing investor demand for broader global equity diversification beyond mega-cap stocks.

The Global X MSCI International Small and Mid Cap ETF (ISMD) provides exposure to around 300 companies across developed markets outside Australia by tracking the MSCI World ex Australia SMID Cap Select Index. The launch comes as global equity markets have become increasingly concentrated in a small number of the world’s largest companies, with investors looking beyond traditional large-cap exposures to diversify portfolios and access a wider range of investment opportunities. Global X said the ETF combines small and mid-cap companies in a single portfolio, allowing investors to gain exposure to businesses earlier in their growth journey while remaining invested as they mature into larger companies.

The fund carries a management fee of 0.45 per cent per annum and holds approximately 300 global small and mid-cap companies. Global X senior product and investment strategist Marc Jocum noted that the characteristics of the global SMID market had changed considerably in recent years.

“The investment case for global SMIDs has evolved considerably. While these companies continue to offer attractive growth potential, we’re also seeing stronger balance sheets, improving profitability and more attractive valuations relative to large-cap equities,” Jocum said.

“Importantly, combining small and mid-caps cohesively allows investors to remain invested as businesses grow through different stages of their lifecycle, rather than selling successful companies as they graduate out of traditional small-cap indices. At a time when market leadership has become increasingly concentrated, ISMD provides investors with diversified exposure to businesses that could become the next generation of global leaders.”

Investor Perspective

Global X chief executive Alex Zaika said many Australian investors already hold significant exposure to the world’s largest companies through broad global equity funds, creating demand for complementary strategies. “Many Australian investors already have meaningful exposure to the world’s largest companies through broad global equity funds. ISMD complements those portfolios by providing access to a part of the market that has historically been underrepresented, despite being home to many of tomorrow’s market leaders,” Zaika said.

“As investors increasingly look to build resilient, diversified portfolios, we’re continuing to expand our product suite with innovative, cost-effective solutions that provide access to areas of the market that have traditionally been difficult to access through index investing.”

Historically, Global X said global SMID investing has been dominated by active managers. ISMD instead offers a low-cost, transparent, rules-based index approach through a single ASX-listed ETF. MSCI head of Asia Pacific Shane Edwards said investor interest was increasingly shifting towards opportunities beyond large-cap equities.

“We are pleased to bring MSCI’s index design capabilities to this initiative at a time when investors are increasingly looking beyond large-cap equities for sources of diversification. Our index supports Global X in offering investors exposure to small and mid-cap companies across international developed markets, a segment that represents a significant share of the global equity opportunity set.”

Concentration risk in major indices has risen sharply. Geopolitical turmoil and inflation shake investors as markets rally around a few mega-cap names. The Global X MSCI International Small and Mid Cap ETF (ISMD) offers a solution for those seeking to mitigate this risk. The fund holds approximately 300 companies across developed markets outside Australia by tracking the MSCI World ex Australia SMID Cap Select Index.

Global X senior product and investment strategist Marc Jocum noted that the characteristics of the global SMID market had changed considerably in recent years. The investment case for global SMIDs has evolved considerably. While these companies continue to offer attractive growth potential, we’re also seeing stronger balance sheets, improving profitability and more attractive valuations relative to large-cap equities. At a time when market leadership has become increasingly concentrated, ISMD provides investors with diversified exposure to businesses that could become the next generation of global leaders.

Zaika added that Australian investors often lack sufficient exposure to this specific area. Many Australian investors already have meaningful exposure to the world’s largest companies through broad global equity funds. ISMD complements those portfolios by providing access to a part of the market that has historically been underrepresented, despite being home to many of tomorrow’s market leaders. Global X chief executive Alex Zaika said many Australian investors already hold significant exposure to the world’s largest companies through broad global equity funds, creating demand for complementary strategies.

Global X said global SMID investing has been dominated by active managers. ISMD instead offers a low-cost, transparent, rules-based index approach through a single ASX-listed ETF. MSCI head of Asia Pacific Shane Edwards said investor interest was increasingly shifting towards opportunities beyond large-cap equities.

We are pleased to bring MSCI’s index design capabilities to this initiative at a time when investors are increasingly looking beyond large-cap equities for sources of diversification. Our index supports Global X in offering investors exposure to small and mid-cap companies across international developed markets, a segment that represents a significant share of the global equity opportunity set.

The fund carries a management fee of 0.45 per cent per annum and holds approximately 300 global small and mid-cap companies. Global X said the ETF combines small and mid-cap companies in a single portfolio, allowing investors to gain exposure to businesses earlier in their growth journey while remaining invested as they mature into larger companies.