Latin America ETFs: It’s Not All About Brazil
August 25th 2010 at 6:00am by Tom Lydon
Brazil’s economy largely dominates South America, but other emerging Latin American economies are also showing some promise. Good news: there are exchange traded funds (ETFs) for them, too.
The Brazilian Central Bank President Henrique Meirelles expects that the economy will continue to accelerate in the third quarter despite recent slowdowns, reports Gerald Jeffris for The Wall Street Journal. The Central Bank slowed its interest rate tightening in July to 0.50% from a previously estimated 0.75%, which was widely unexpected by analysts. The next rate policy announcement is scheduled for Sept. 1. [Brazil ETFs Lead the Latin American Economy.]
Brazil is the largest country in Latin America, both in terms of land mass and population, and has basically popped into the economic limelight overnight, remarks Ron Rowland for Money and Markets.
But enough about Brazil (which, by the way, can be directly played via iShares MSCI Brazil (NYSEArca: EWZ), among others, which we’ve listed below.).
Brazil’s rich economy is also spreading and developing its neighbors through trade. ETF investors can’t play all of Latin America’s smaller countries individually, but there are some choices:
- iShares MSCI Chile Investable Mkt Idx (NYSEArca: ECH). Chile, a fellow member of the regional free-trade pact of 1996, is a close commercial partner of Brazil. The country is a market-oriented economy and the government is fiscally responsible. Additionally, Chile is rich in natural resources.
- iShares MSCI All Peru Capped Index (NYSEArca: EPU). EPU is highly weighted in materials, which reflects Peru’s large mining sector. Among the country’s top exports are gold, copper and zinc.
- Global X/InterBolsa FTSE Colombia 20 ETF (NYSEArca: GXG). Colombia’s economy is dependent on natural resource exports, with fast growing financial and manufacturing sectors. Colombia, South America’s third-largest oil producer and largest coal producer, though rife with guerrilla fighting and internal risks, is still a popular foreign investment destination, writes Nancy Lopez for The Associated Press. The government is projecting a 4.5% GDP increase this year, backed by foreign direct investment.
For more information on Latin America, visit our Latin America category. That’s not all, though – there is an increasing number of ways to get exposure to the economies of Latin America, including through broad funds or more focused single-country picks. Keep in mind that these economies are heavy in natural resources, so take care not to get overweight in commodities.
- iShares S&P Latin America 40 Index (NYSEArca: ILF)
- SPDR S&P Emerging Latin America (NYSEArca: GML)
- iShares MSCI Mexico (NYSEArca: EWW)
- iShares MSCI Brazil ETF (NYSEArca: EWZ)
- Global X Brazil Mid-Cap ETF (NYSEArca: BRAZ)
- Global X Brazil Financials ETF (NYSEArca: BRAF)
- EGS INDXX Brazil Infrastructure ETF (NYSEArca: BRXX)
- Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF)
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.