Why ETF Investors Should Consider Latin America
May 4th 2012 at 6:00am by Tom Lydon
Exchange traded funds may be one of the best ways to gain exposure to Latin American countries. Economists at the International Monetary Fund raised economic growth forecasts for most Latin American countries, however, a diversified approach to this region can protect against any lingering downside risk.
“The IMF’s latest Regional Economic Outlook for the Western Hemisphere, released Wednesday, suggests the economic good times in Latin America will continue to roll. The fund’s new forecasts for economic growth in Latin America–3.7% in 2012, and 4.1% in 2013–are a few ticks higher from its own projections three months ago, with 2011 growth of about 4.5%,” according to a report posted at Morningstar. [Chile, Peru Stand Out in Emerging Market ETFs]
One of the best attributes of an ETF focused on Latin America is that it brings instant diversification to the region for a low fee, and stock picking is eliminated, which saves time, money and mitigates risk, reports Micheal Molinski for MarketWatch.
The near-future for Latin American countries and economies is looking positive, because countries such as Brazil, Chile and Peru are commodity-rich, and access to financing in these economies is plentiful. [International ETFs hat help Diversify]
Downside risk can be seen in the uncertainty of the Eurozone, with elevated debt woes, and a slowdown in the growth of China, a huge consumer of commodities and natural resources.
The IMF noted that South America’s financially integrated economies of Brazil, Chile, Colombia, Peru and Uruguay grew an average 5.5% last year, down from 6.5% in 2010. These steady, strong growth rates, the IMF said in its report, present a challenge for central banks in the region. [ETF Peformance: A Selective Approach to Emerging Markets]
Latin American regional ETFs include:
- iShares Latin American 40 Index Fund ETF (NYSEArca: ILF)
- SPDR S&P Latin America ETF (NYSEArca: GML)
- Market Vectors Latin America Small-Cap Index ETF (NYSEArca: LATM)
iShares Latin American 40 Index Fund ETF
Tisha Guerrero 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.