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Why I Joined Global X

Sep 8, 2017

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In my first piece, Passive’s Not Passive, I mentioned that the last twenty years have flown by (with too many active vs passive non-debates to count). As kids, we wake up each day ready to absorb the world, knowing that life’s biggest milestones are in front of us. Maybe it’s because everything’s new when we’re young. As adults, our sights tend to narrow amid routines, responsibilities, and a sense of been there, done that. But then there are times as adults when we break from the norm, see where we are, and know that it’s time for something new.

Checking the Boxes

Why talk about time? It factors into everything we do, from mundane decisions like what to wear or where to work or what to invest in.

When deciding whether a company is a good fit, I start by looking at two things: 1) the timing has to be right, both personally and professionally, to take on what the company needs; 2) the company should have the resources that allow me to do my best work, in line with the firm’s goals and time horizon.

Global X met both of those requirements for me. In just nine years, the firm has built an impressively deep toolkit of exchange-traded funds. And it has created a culture that allows its people to widen their view in an environment that I, for one, haven’t experienced before—and I don’t just mean the office foosball table.

A Third Factor

Global X has set its sights on exploring innovative and intelligent solutions for an investment structure that some, including myself, think of as a financial technology and a disruptor. In the ETF world in which it operates, one that is increasing in size, value, and importance, many of Global X’s products truly go beyond the ordinary.

The company’s focus on delivering outcomes—such as increasing yield potential, targeting high growth themes, accessing specific markets, or improving a portfolio’s core—appeals to a broad range of investors seeking to achieve specific goals with their portfolios.

My job? Assist in the construction of ETFs and leverage our existing product verticals per below:

Seeking Yield from Income Alternatives:  Fixed income is designed to deliver income and potentially capital appreciation.  Given historically low and likely increasing yields, it is not clear this asset class will provide either. As a result, many investors are looking at alternate income tools. Dividend-focused ETFs have become popular investment vehicles, but Global X views them with a bit of a twist. The firm’s SuperDividend family of ETFs seeks to maximize the income potential from various geographies and asset classes by accessing just the highest tier of dividend payers.

Global X complements the SuperDividends with a family of MLP funds that also seek to help investors achieve higher yield potential for their portfolios.

Capturing Trends: Accessing powerful macro-level trends appeals to many investors who are increasingly conscious of the rapid changes that can impact the economy. Look no further than the technology sector, where robotics and artificial intelligence, lithium batteries, and the Internet of Things are disrupting manufacturing, transportation, defense, agriculture, and consumer products. Millennials and Generation X seem to be on board—a recent Global X survey found that 83% of affluent Millennials and 61% of affluent Gen X’ers surveyed said they’re extremely/very interested in thematic investing.

Emerging Further: High valuations and sluggish growth in developed markets have many investors seeking return potential from emerging markets. But a market can only emerge for so long before it reaches middle-income status and growth begins to taper. To find higher growth potential, Global X sees country exposure beyond the BRICs (Brazil, Russia, India, China) of the world and accounts for the “next” emerging countries as possible sources of growth. Another strategy is to target specific segments of the BRIC countries that are on the cusp of breaking out, such as those sectors likely to be affected by, say, the rising spending power of the Chinese consumer.

Seeking to Improve the Core: People seem to multi-task life these days, so it stands to reason their investment vehicles should be able to do the same. Global X believes multi-factor strategies are well positioned for the current landscape as investors look for strategies that balance outperformance potential, and single factor risks, with diversification and low management fees.

What’s Old is New Again

When I was younger, I never thought I’d be as old as my parents. Now, I’m a parent. When I was starting out in my career, today seemed impossibly far away (and not just because my first job had me in Ukraine). But now that I’m here, with resources and a mandate for innovation, the Global X team and the firm’s products have my eyes wide open to new possibilities. Our milestones are in front of us, and time’s flying as it always does when I’m having fun.

Category: Commentary

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Carefully consider the Funds’ investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds’ summary or full prospectus, which may be obtained by calling 1-888-GX-FUND-1 (1.888.493.8631), or by visiting www.globalxetfs.com. Read the prospectus carefully before investing.

Investing involves risk, including the possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging and frontier markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. High yielding stocks are often speculative, high-risk investments. These companies can be paying out more than they can support and may reduce their dividends or stop paying dividends at any time, which could have a material adverse effect on the stock price of these companies. Securities focusing on a single country and narrowly focused investments may be subject to higher volatility. Investments in securities of Information Technology companies can be affected by rapid product obsolescence and intense industry competition.

Investments in securities of MLPs involve risk that differ from investments in common stock including risks related to limited control and limited rights to vote on matters affecting the MLP. MLP common units and other equity securities can be affected by macro-economic and other factors affecting the stock market in general, expectations of interest rates, investor sentiment towards MLPs or the energy sector, changes in a particular issuer’s financial condition, or unfavorable or unanticipated poor performance of a particular issuer (in the case of MLPs, generally measured in terms of distributable cash flow). The MLP Funds invest in the energy industry, which entails significant risk and volatility. The MLP Funds have different and more complex tax structure than traditional ETFs and investors should consider carefully the significant tax implications of an investment.

There is no guarantee distributions will be made and dividends may be reduced or eliminated at any time. The potential benefits of investing in MLPs depend on them being treated as partnerships for federal income tax purposes. If the MLP is deemed to be a corporation, its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distributions to the fund which could result in a reduction of the fund’s value. MLPA and MLPJ are taxed as regular corporations for federal income tax purposes, which differs from most investment companies. The amount of taxes currently paid by MLPA and MLPJ will vary depending on the amount of income and gains derived from MLP interests and such taxes will reduce an investor’s return from an investment in the funds. MLPA and MLPJ will accrue deferred income taxes for any future tax liability associated with certain MLP interests. Upon the sale of an MLP security, MLPA and MLPJ may be liable for previously deferred taxes which may increase expenses and lower the fund’s NAV.

For more on the risks of a specific fund, please read its prospectus.

Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

Global X Management Company, LLC serves as an advisor to the Global X Funds. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Global X Management Company, LLC.