Latin American ETFs Have New Competition

Two new leveraged mutual funds from ProFunds could gobble assets away from other Latin American exchange traded funds (ETFs). The ProFunds UltraShort Latin America ProFund (UFPIX) is designed to reflect twice the downside movement of the Latin America 35 ADR Index. On the opposite end is the ProFunds UltraLatin America ProFund (UBPIX), which is leveraged to earn twice the upside of the Bank of New York Latin America 35 ADR Index. This index rose 46% in the first nine months of the year, says Bill Donoghue for MarketWatch. If these new funds take off, they could take away assets from ETFs such as iShares MSCI Brazil (EWZ), iShares S&P Latin American 40 (ILF) and the iShares Mexico Index (EWW). As of Sept. 30, investors had $10.4 billion invested in Latin American ETFs. Year-to-date, EWZ is up 61.5%, ILF is up 44.7% and EWW is up 19.4%.

Latin American countries have been attractive investment areas because Brazil is becoming energy independent and Mexico is enjoying a boom in its middle-class. Plus, a weakening dollar helps develop these foreign markets.