Four Latin America ETFs Your Broker Forgot To Tell You About
The rapid growth of emerging markets ETFs as a sub-sector of the ETF universe has been particularly beneficial for investors seeking exposure to Latin America, and yes, that means more than just Brazil.
Sure, there are currently almost 70 ETFs offering exposure to Brazil, the region's largest economy, but who would have ever thought Peru would find its way into 45 ETFs and 17 ETFs would make room for Argentina, among other examples?
Nope, there isn't a shortage of options for investing south of the border with ETFs, but a rising number of Latin America ETFs means there are now more and more viable options slipping through the cracks. Here are a few your broker may have neglected to mention.
1) iShares MSCI Brazil Small Cap Index Fund (NYSE: EWZS): When EWZS debuted last September, it took the fight right to the more established Market Vectors Brazil SmallCap ETF (NYSE: BRF) with a better expense ratio. Market Vectors fought back and pared BRF's fees to 0.62% compared to 0.65% for EWZS. Both are down year-to-date, though EWZS is less bad. BRF is by no means unheralded, but EWZS is to some extent. Homework is needed here to decide if the more expensive newcomer is worth it compared to its older rival.
2) SPDR S&P Emerging Latin America ETF (NYSE: GML): Yes, it is kind of hard to say that an ETF that is over four-years old and has almost $203 million in assets under management is forgotten, but if such a fund existed, it would be GML. There are several ETFs that claim multi-country Latin America exposure, which really means Brazil accounts for 60%-75% of the ETF's weight and GML keeps up that tradition with a Brazilian allocation of nearly 65%.
The knock on GML: Avoid it if you're looking to avoid or already have exposure to Petrobras (NYSE: PBR). Brazil's state-run oil giant accounts for 11% of GML's weight.
3) Global X FTSE Argentina 20 ETF (NYSE: ARGT): The first Argentina-specific ETF, ARGT made its debut in March and has attracted over $3.6 million in assets under management. Not a bad haul and if Argentina's robust GDP forecasts for the next couple of years prove accurate, ARGT could easily shift from unnoticed to quite popular.
The premise behind offering an Argentina-specific ETF is valid, but a weaker-than-expected environment for emerging markets ETFs as a group has probably held ARGT back a bit. Consider this a longer term play where your patience could be handsomely rewarded.
4) Global X Andean FTSE 40 ETF (NYSE: AND): Easily the most unique spin on the multi-country Latin America theme, AND is not all about Brazil and Mexico as so many multi-country LatAm ETFs are. Rather, AND is a fine idea for the indecisive LatAm investor. Can't decide between Chile, Colombia and Peru? AND has you covered as those are three countries that comprise this fund. The ETF has drawn $7.5 million in AUM since its February debut.
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