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Beyond Brazil, Part 1: Mexico ETF

Launched in 1996, the iShares MSCI Mexico Investable Market Index Fund (EWW) is currently the only pure play ETF available for investors looking for access to the U.S.' southern neighbor.

Sector exposure is in line with the economy. Telecommunications account for 35% of assests, followed by 23% in consumer staples, 14% in materials, 13% in consumer discretionary and 8% in industrials.

Although the fund is designed to track the broad Mexican market through an index consisting of 45 holdings, its performance is largely dependent on the success of a small number of these constituents. Carlos Slim's telecommunications firm, America Movil (AMX - Get Report), accounts for nearly a quarter of the fund's total portfolio. Other top holdings include Wal-Mart de Mexico (WMMVY) and cement giant Cemex (CX - Get Report). Together, these top holdings make up 40% of the fund's index.

EWW's Performance has remained negative through the first part of 2010, but its growth in the most recent one-year period ending Feb. 23 has been impressive. In that time, the fund has managed to gain more than 100%.

Given the top-heavy nature of EWW, I would advise investors looking to hold this fund to keep exposure small. Also, it is essential that investors continually monitor the performance of the instrument and the holdings dominating its index. If any of these top weighted companies see a volatile move, its effect on EWW's performance will be significant.

Stay tuned for a look at Chile later today.

-- Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion owns iShares MSCI Mexico Investable Market Index Fund.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.
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EWW $51.56 -0.21%
WMMVY $24.70 -1.04%
AMX $13.15 -0.30%
CX $6.93 -0.43%
AAPL $93.10 -0.56%


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