Pleasant Surprise From the Peru ETF

In a move that went somewhat unnoticed, the iShares MSCI All Peru Capped ETF (NYSEArca: EPU) was the top-performing single-country Latin America ETF in April, gaining 7.3%. That tops even the high-flying iShares MSCI Brazil Capped ETF (NYSEArca: EWZ).

What makes EPU’s April upside all the more impressive is that the fund got little help from gold and silver futures and the miners that extract those metals from the earth. Impressive because Peru is one the largest producers of both metals. [Peru ETF Rebounds With Mining ETFs]

That is right. Even as the Global X Silvers Miners ETF (NYSEArca: SIL) lost 2.1% over the past month, EPU found a way to rally. One obvious catalyst behind EPU’s bullishness has been upbeat growth forecasts.

Last month, the International Monetary Fund forecast 2014 GDP growth of 5.5% for Peru. That compares with 4.5% for Colombia and just 1.8% for Brazil. Brazil and Colombia are South America’s largest economies. The IMF expects Peruvian GDP to rise 5.8% next year and noted the country’s 2.5% rate of inflation is the second-lowest in Latin America behind Colombia.

Peru is also a major copper producer, but EPU is up 2.3% year-to-date even as the iPath Dow Jones-UBS Copper Total Return Sub-Index ETN (NYSEArca: JJC) is down 11%. [First Quarter’s Worst ETFs]

Over the longer term, EPU, along with Colombia ETFs, could benefit from increased infrastructure spending.