Although the iShares S&P Latin America 40 Index (ILF) exchange traded fund (ETF) is down 16.1% for the month, it’s up 12.3% year-to-date and generally has been a strong performer for most of this year. ILF’s main components are Brazil at 59.8% and Mexico at 29.5%. The country-based ETFs for these countries, iShares MSCI Brazil Index (EWZ) and iShares MSCI Mexico Index (EWW), up until the last month or so, have had similar results as ILF. Looking at current events provides clues for what might be causing these ETFs to vary.

Latin America’s growing middle class has helped generate market reforms as well as build a strong foundation for education, political stability and urbanization, says Carl Delfeld for ETF XRAY. According to The Economist, the incomes of the poorest half of the populations are growing faster than the average in Brazil and Mexico. This means poverty is falling, and income distribution is starting to become lass unbalanced.

However, Hurricane Dean is on Mexican President Felipe Calderon’s mind, as it was a top-scale Category 5 storm when it hit Mexico’s Yucatan Peninsula today, according to John Pain for the Associated Press. The hurricane caused Calderon to leave early from a meeting with President Bush and Canadian Prime Minister Stephen Harper to discuss creating closer ties and fighting terrorism.

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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.