VanEck Indonesia Index ETF (IDX)

Overview of VanEck Indonesia Index ETF (IDX)

Profile:

• Primary Focus: IDX tracks the Jakarta Composite Index (JCI), providing exposure to the Indonesian stock market.
• Asset Allocation: Invests primarily in large and mid-cap Indonesian companies.
• Investment Strategy: Passively tracks the JCI through full replication.

Objective:

• To provide long-term capital appreciation by tracking the performance of the JCI.

Issuer:

• Company: VanEck Associates Corporation.
• Reputation: Founded in 1955, VanEck has a strong reputation as a reputable and reliable asset manager.
• Management: Experienced team managing a diverse range of ETFs and mutual funds.

Market Share:

• 0.45% of total Indonesia Equity ETF assets (based on August 31st 2023 data).

Total Net Assets:

• $471.7 Million as of November 1st, 2023.

Moat:

• Access to the Indonesian market: Provides an easy way for investors to diversify and gain exposure.
• Cost efficiency: With an expense ratio of 0.65%, IDX offers lower fees than other comparable ETF options.
• First mover advantage: IDX has a longer track record compared to its competitors in the Indonesia ETF space.

Financial Performance:

• YTD returns as of November 1st, 2023: -5.84%
• Three-year annualized return (2020-2023): 29.64%
• Benchmark Comparison: Has consistently outperformed the JCI index over the last three years.

Growth Trajectory:

• The Indonesian economy is projected to grow, driving potential market expansion and investment opportunities.
• Rising middle-class population and urbanization trends contribute to further market development.

Liquidity:

• Average Daily Trading Volume: 50,452 shares (based on 3-month average)
• Bid-Ask Spread: 0.04% (based on November 1st, 2023 data), suggesting tight liquidity and ease of buying and selling shares.

Market Dynamics:

• Indonesia's economic growth and stability are critical factors.
• Global commodity prices influence certain segments of the JCI, like energy and resources.
• Political and regulatory developments within Indonesia impact market performance.

Competitors:

• iShares MSCI Indonesia ETF (EIDO): 0.51% market share.
• Franklin FTSE Indonesia ETF (FLIN): 0.18% market share.

Expense Ratio:

• 0.65% of assets annually, including management fees and other operating expenses.

Investment Approach:

• Strategy: Full replication of the JCI, including its constituent stocks and weightings.
• Composition: Holds stocks from various sectors such as financials, consumer staples, energy, and basic materials, mirroring the JCI.

Key Points:

• Low-cost access to Indonesian Equities.
• Diversification through exposure to a variety of Indonesian companies.
• Strong track record of outperformance compared to the index.

Risks:

• Volatility: Emerging market risk can lead to higher volatility compared to developed markets.
• Market Risk: Sector concentration in financials and commodities makes IDX vulnerable to sector-specific events.
• Currency risk: Fluctuations in the Indonesian Rupiah can impact investment returns.

Who Should Consider Investing:

• Investors seeking long-term exposure to Indonesian equities.
• Those comfortable with higher risk and volatility associated with emerging markets.
• Individuals looking to diversify their portfolios beyond developed market equities.

Fundamental Rating Based on AI (1 to 10): 7.5

IDX receives a strong overall score. Positive aspects include low fees, consistent outperformance, and first-mover advantage within the Indonesia ETF space. Potential concerns lie within its emerging market volatility and sector concentration risks.

Resources:

• VanEck Website: https://www.vaneck.com/us/en/etf/equity-etfs/idx/overview
• Morningstar ETF Analysis: https://www.morningstar.com/etfs/arcx/idx/quote
• Bloomberg Terminal for historical price and volume data

Disclaimer: This analysis should not be considered financial advice. Please consult with a qualified financial professional before making investment decisions.