Investing in Latin America.
The economies of Latin America, many of which have taken a multiyear beating, are back with gusto in 2016, with many funds covering the region rebounding by 20, 30 and even 40 percent. That’s coming on the power of rebounding prices in energy and various materials, which make or break the bank for numerous countries south of the U.S. If you’re looking for ways to jump into this potentially fruitful (though likely volatile) region, these exchange-traded funds can expose you to some of Latin America’s largest economies.
SPDR S&P Emerging Latin America ETF (ticker: GML)
GML focuses on a basket of 322 Latin American companies, though the fund isn’t as diverse as that count would suggest. GML represents just five Latin American countries, with Brazil accounting for nearly half the fund’s weight, and Mexico nearly a third. Top holdings aren’t egregiously weighted, though, with Itau Unibanco Holding (ITUB) at nearly 5 percent and mega-brewer Ambev (ABEV) at just more than 4 percent. You’re not going to find much more diversity in Latin American funds.
Expenses: 0.49 percent, or $49 annually per $10,000 invested
Global X FTSE Andean 40 ETF (AND)
If you’d like more exposure to what GML goes light on, the AND is for you. Whlie Chile, Colombia and Peru make up just more than 20 percent of SPDR’s fund, they make up all of Global X’s fund, at a respective 49, 33 and 18 percent. Financials such as top holding Credicorp (BAP), a multi-armed Peruvian bank that also offers insurance and investment services, make up the largest sector at 36 percent, though materials, utilities and consumer staples all get double-digit weightings.
Expenses: 0.72 percent
iShares MSCI Brazil (EWZ)
If the EWZ were a carnival ride, it’d be the Vomit Comet. The past year has seen this Brazilian fund plunge 45 percent from its peak before rebounding 55 percent. That’s what you can expect when your president is facing impeachment — which is what’s happening with Brazilian President Dilma Rousseff, who also was embroiled with a corruption scandal involving EWZ top 10 holding Petroleo Brasileiro Petrobras (PBR). Still, EWZ is enjoying a huge upswing, and its battered energy holdings are getting a lift from rebounding oil prices.
Expenses: 0.62 percent
iShares MSCI Mexico Capped ETF (EWW)
iShares also offers the leading Mexican ETF, with more than $1 billion in assets under management. Like many single-country funds, EWW is terribly top-heavy, with the top five of 63 holdings making up well more than 40 percent of the ETF’s weight. That includes Mexican telecom America Movil (AMX) at 11 percent. To the fund’s credit, it does mirror Mexico’s diverse economy, with a good balance of six sectors receiving double-digit weights, including consumer staples at nearly 30 percent of the fund.
Expenses: 0.48 percent
Global X MSCI Argentina (ARGT)
Argentina has long made its trade off its rich natural resources — reflected in the energy-heavy nature of Global X’s ARGT. Companies like steel pipemaker Tenaris (TS) and integrated oil and gas major YPF (YPF) are heavily representative of Argentina’s economy, and are similarly weighted in the ARGT at roughly 17 and 8 percent, respectively. ARGT has rallied hard in 2016, up roughly 20 percent as the country turns to new president Mauricio Macri to turn around the country’s struggling fortunes.
Expenses: 0.75 percent
iShares MSCI Chile Capped ETF (ECH)
The ECH has actually been a miserable fund for the past five years as economic growth has slowed, thanks in large part to dwindling copper prices; Chile is the world’s largest copper producer at nearly a third of the world’s output. However, industrial output has been better in recent months, and ECH has enjoyed a recovery year in 2016, up 20 percent. The fund itself is very utility-heavy (32 percent), with strong weightings in financials (19 percent) and materials (13 percent) as well. However, top holdings include energy play Empresas Copec and consumer plays S.A.C.I. Falabella and Cencosud (CNCO) at a combined 20 percent-plus in weight.
Expenses: 0.62 percent
Global X MSCI Colombia (GXG)
Weak energy and materials prices hurt Colombia’s economy in 2015, slowing GDP growth and sending the peso into a tailspin. Like other Latin American ETFs, though, GXG is enjoying a bounce — to the tune of 25 percent for the year. Financials (36 percent) and utilities (18 percent) are the fund’s thickest sectors, with materials (17 percent) and energy (12 percent) less than in previous years, as GXG is market cap-weighted, and as GXG’s holdings in these spaces have seen their market capitalizations decimated.
Expenses: 0.68 percent
iShares MSCI All Peru Capped ETF (EPU)
EPU has led a stomach-churning year, with shares hemorrhaging 40 percent from May 2015 highs of about $31 down to a February low in the $18s … and now it’s back near $31. You can thank a rebound in gold, silver, copper and a few other materials, which have been the rising tide to all of Peru’s mining boats. EPU has a massive 47 percent of its assets invested in mining companies, including Southern Copper Corp. (SCCO), Compania de Minas Buenaventura (BVN) and Fortuna Silver Mines (FSM).
Expenses: 0.62 percent
Tierra XP Latin America Real Estate ETF (LARE)
LARE is a young fund that only came to life in December 2015 — not bad timing, as that’s about a month before Latin American stocks snapped back with a vengeance. LARE, which invests primarily in real estate investment trusts, is built from an index of 56 REITs, and actually is pretty well diversified in that no holding currently makes up more than 3.4 percent of the fund.
Expenses: 0.79 percent
More from U.S. News
13 Money Hacks to Turbocharge Your Investments
10 Ways You Can Throw Retail Stocks in Your Cart
9 Ways to Harness the Growth of Latin America originally appeared on usnews.com
