Latin America ETFs Post Inflows

China may be the topic of the day, but looking at the Latin American exchange traded funds (ETFs), that is where things are moving.  While China saw fund outflows this month, Latin American funds were the only emerging market funds to post inflows.  iShares FTSE/Xinhua China (FXI) is down 0.2% year-to-date, while iShares S&P Latin America (ILF) is up 24%.

Trang Ho for Investor’s Business Daily compares Latin American focused ETFs.  SPDR S&P Emerging Latin America (GML) is up 14% since its March birth date. Both ILF and GML have more than half their weight in Brazil, followed by Mexico, Chile and Argentina.  GML does contain small positions from Peru, Columbia and Venezuela.

Looking at the individual countries, iShares MSCI Brazil Index (EWZ) is up 27%, while iShares MSCI Mexico Index (EWW) is up 23%.  Some favor Mexico to Brazil due to a better transparency in financial reporting.  Brazil doesn’t have local monetary policy and the tax laws need updating.  However, Mexico’s economy may be affected in the short term by the political transition, which has delayed execution of the federal budget, and slowed private investment and consumption decisions.  Mexico’s projected GDP growth for this year is 2% and 4% for next year.  Brazil’s GDP is estimated to grow 4.3% this year and 5% next year.

For full disclosure, some of Tom Lydon’s clients own ILF.