Despite Macro Risks, This Colombian ETF is Up 20% YTD

Macroeconomic challenges are persisting in Latin America as global inflation continues to rack economies, including that of Colombia. It increases the risk already associated with emerging markets (EM) investing, but there are still opportunities in the right places.

“After years of fluctuating around targets, inflation in Latin America’s largest economies is the highest it’s been in 15 years, having suffered two major shocks: the impact of the pandemic, and of the Russia-Ukraine war,” an International Monetary Fund (IMF) blog notes.

“As in other emerging markets and advanced economies, inflation accelerated in Brazil, Chile, Colombia, Mexico, and Peru—the LA5—in 2021,” the blog says further. “The increase in inflation was initially driven by surging food and energy prices but became broader, reflecting monetary policy inertia and wage indexation practices (contracts that adjust their terms automatically with inflation), as well as a strong recovery in demand, initially for goods but later for services too.”

Bucking the Macro Trend

Despite the headwinds Latin America is facing, it doesn’t appear to be fazing the Global X MSCI Colombia ETF (GXG). The fund is up close to 20% so far this year.

GXG seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Colombia Select 25/50 Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”) based on the securities in the underlying index.

It also invests at least 80% of its total assets in securities of companies that are economically tied to Colombia. The underlying index is designed to represent the performance of the broad Colombia equity universe.

GXG provides investors with:

  • Long-Term Growth Potential: Rebounding from the pandemic, Colombia’s GDP is forecasted to grow at rates exceeding 3% in 20222026.
  • Targeted Exposure: The Fund targets exposure to a single country.
  • Efficient Access: Efficient access to a broad basket of Colombian securities.

GXG Chart

GXG data by YCharts

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