A New Way To Invest in Chile

One drawback is that the fund is expensive. ECH has a 0.74% fee compared with 0.54% for most of the other single-country funds from iShare (although there are several emerging-market funds from iShares with a higher fee). I attribute this to the fact that Chile is a smaller and a slightly more difficult market to access.

The investment thesis for Chile, as it did when I wrote the previous article, depends in large part on global demand for copper. Chile produces about one-third of the world's copper. The infrastructure buildout/modernization theme that has been a catalyst for all emerging markets is going to continue, even if there is a global slowdown.

The chart comparing the Dow Jones Chile Index and the price of copper shows that most of the time there is a correlation. I should note that when the occasional divergence does come, the difference between the two can be huge.

I am not saying that Chilean equities would be immune from a global bear market. The chart clearly shows that this market has participated in all three declines this year. But I do believe that the fundamental story underlying Chilean equities could be on firmer ground than some other countries. So the Chilean market could be on a different economic cycle than the U.S.

A Good Diversifier The Chilean market could be on a different economic cycle than the U.S.