+ 7.36
+ 2.33%
+ 2.46
+ 0.8%
+ 5.16
+ 1.36%
+ 0.15
+ 0.1%
+ 2.84
+ 1.65%

Get Paid To Play In Latin America

May 20, 2016 6:42 am
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Get Paid To Play In Latin America

When Latin American stocks and exchange traded funds are rewarding, these instruments can be very rewarding, but those rewards don't come with risk or volatility. For example, the iShares Latin America 40 ETF (NYSE: ILF) is up 14.2 percent year-to-date, but underscoring the volatility that comes with investing in this region, ILF has a three-year standard deviation of 25 percent.

Perhaps dividends can smooth out the Latin American investing experience. Investors will be able to test that theory with the BullMark LatAm Select Leaders ETF (NASDAQ: BMLA), which debuted Thursday. While the BullMark LatAm Select Leaders ETF is not the first diversified Latin America ETF to trade in the U.S., it's the first to emphasize dividends.

BMLA follows the BullMark LatAm Select Leaders Index, which “focuses on yield enhancement and liquidity. BullMark Financial Group is one of Brazil’s largest RIA firms and has extensive experience in the Latin American markets. With their knowledge and expertise they introduced the BullMark LatAm Select Leaders Index,” according to Recon Capital, BMLA's issuer. 

Like many diversified Latin America ETFs, BMLA is Brazil-heavy, allocating nearly two-thirds of its weight to the region's largest economy. Mexico, Latin America's second-largest economy, is quarter of the new ETF's weight while Chile and Colombia combine for about 5 percent. Brazil's dominance in BMLA is sensible not only because of the country's economic heft, but also because it is usually a fixture in established, diversified emerging markets dividend ETFs.

To ensure adequate liquidity, BMLA's constituents must have market values of at least $500 million and 90-day average trading volume of $3 million. BMLA requires its components to have dividend yields of at least 2 percent.

BMLA's top 10 holdings combine for about 63 percent of the ETF's weight. The new ETF holds some US-listed names, include iron ore giant Vale SA (NYSE: VALE).

BMLA charges 0.7 percent per year, or $70 for every $10,000 invested.

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