We’re only six weeks into the year, and the U.S. markets and related exchange traded funds (ETFs) have gotten off to a slow start. The domestic markets are down anywhere from 7-12%.

But emerging markets are another story. Sure, they carry more risk, but they also have been holding their ground where relative strength is concerned. Matthew D. McCall for Seeking Alpha points out that iShares Malaysia (EWM) is the only single-country ETF showing a positive return, up 4% year-to-date.

The next three top performers are all in Latin America:

  • iShares Mexico (EWW), down 1%
  • iShares Chile (ECH), down 2.3%
  • iShares Brazil (EWZ), down 2.5%

Southeast Asian countries are considered of "above average" risk, while others are considered "top heavy" in the political system. In contrast, Latin America looks good because of its relatively stable government, richness in commodities and concentration in growth. In a rough patch, it can be good to look for relative strength in ETFs by comparing them to their peers.

If you can’t decide which Latin American country will perform, another route to take is the iShares S&P Latin America 40 ETF (ILF). It has a concentration in materials and energy (52%) in one fund, and year-to-date, it’s up 3.4%.

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

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.

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