Latin American Debt Defaults Could Hit ETFs

With this in mind, some equities that may be affected by delinquencies in sovereign debt include:

• The iShares S&P Latin America 40 Index (ILF), which has more than doubled from a March low of $21.64 to close at $46.93 on Thursday. Mexico comprises nearly 22% of the total assets of ILF.
• The iShares MSCI Emerging Markets Index (EEM), which is up 102% from a March low of $19.94 to close at $40.40 on Thursday. Nearly 26% of EEM's asset base is allocated to Latin America.

To help mitigate the risks involved with investing in these equities, the use of an exit strategy is of utmost importance. According to the latest data from www.SmartStops.net, an upward trend in the mentioned ETFs is likely to come to an end at the following price points: ILF at $45.73 and EEM at $39.38. These price points change on a daily basis with market fluctuations; updated data can be found at www.SmartStops.net.

Written by Kevin Gerwal in Laguna Niguel, Calif.

>To order reprints of this article, click here: Reprints