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ETFs For A Colombia Ratings Upgrade

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ETFs For A Colombia Ratings Upgrade

It's great that Spanish is the native tongue in Colombia because the best way of describing the 2010 performance of Colombian stocks and ETFs that track the South American country is "en fuego."

Bolstered by increased oil production and a government that has worked diligently to change the world's perception of Colombia, the country formerly known for its illegal exports and Marxist rebels is now a legitimate destination international investment capital.

Always late to a party, Moody's Investors Service boosted its outlook on Colombia to "positive" and that means the country's credit rating could move out of junk status sometime soon.

Moody's rates Columbia at Ba1, its highest speculative-range grade, according to the Wall Street Journal.

A move to investment grade status would help the following the ETFs with Colombia ties, not that they need any help at this point.

1) Global X/InterBolsa FTSE Colombia 20 ETF (NYSE: GXG):
Up almost 30% in the past six months and more than 60% in 2010, GXG is probably the best performing emerging markets ETF this year.

Investors poured $23 million, or 70% of July's total assets, into GXG in August and that was on top of $18 million the ETF landed in July. GXG has been making new 52-week highs on a regular basis.

2) PowerShares Emerging Markets Sovereign Debt ETF (NYSE: PCY): PCY is also trading near its 52-week and with Colombian debt found among the ETF's top-10 holdings, this is an ideal candidate for a pop if Moody's follows through and boosts Colombia's credit rating.

3) iShares USD Emerging Markets Bond Fund (NYSE: EMB):
Same logic here as with PCY. EMB has a 4.5% allocation to Colombian debt denominated in U.S. dollars.

 

Related Articles (EMB + GXG)

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