Bright Long-Term Prospects for Mexico ETFs

“If the U.S. economy grows, Mexico’s economy is riding shotgun. If the U.S. economy sputters, Mexico’s economy tumbles. Nearly 80% of Mexico’s exports are destined for U.S. markets and half of those exports are higher value products like vehicles and electronic goods as parts of the country continue climbing up the value chain. Rising flows of U.S. natural gas to its southern neighbor provide Mexico with cheaper and cleaner fuel to expand the electric grid and support a growing manufacturing base,” according to MarketWatch.

As an oil exporter, Mexico’s currency has been hit by the falling crude oil prices – ETF investors should keep in mind that while Mexico has a large oil industry, none of the country-specific ETFs include exposure to the sector. Rather, EWW is heavily allocated to defensive sectors, such as consumer staples and telecom.

Related: Investors Look to Dividend-Paying Stock ETFs as Interest Rates Stay Low

Still, Mexico has some work to before making bigger economic gains.

“Mexico may be the 15th-largest country in the world by gross domestic product and the 11th-largest by purchasing power parity, but institutional decay, corruption, a poor education system and depressed wages have fueled a cycle of the rich getting richer and the poor disappearing more and more into a silent majority,” adds MarketWatch.

For more information on the Mexico ETF market, visit our Mexico category.

iShares MSCI Mexico Capped ETF