Beyond Brazil Part 4: Peru

Investors with greater risk appetites may want to move beyond Mexico and Chile and consider two smaller Latin America country ETFs, Colombia and Peru. In addition to greater risk, these country ETFs themselves are more volatile, and in the case of Peru, a high concentration in a single sector, materials.

The nation of Peru was once home to the Inca Empire, the largest pre-Columbus American empire. In modern times, however, the nation is considered by the International Monetary Fund as a global emerging market. Slightly smaller than the state of Alaska, Peru boasts a population of nearly 30 million and a GDP ranked 45th in the world.

Although located in a tropical region of the globe, geographic phenomena like the Andes mountain range, which runs through Peru, provide the nation with a wide variety of climates. This ranges from a semi-arid, desert-like coast to temperate or even frigid atmosphere in the mountainous range, to rainforestlike conditions toward the East.

The nation's diverse climate in turn allows for a diverse agricultural palate. Peruvian farmers today produce a wide variety of crops including cocoa, coffee, apples and corn.

>>Want More ETFs? Visit Our ETF Screener Page

Peru's bread and butter, however, is not agriculture. Instead, the nation relies heavily on its services and industries sectors, which make up nearly 80% of the nation's GDP.

With large coastlines and the expansive Andes range, Peru has grown to become an international leader in the fishing industry as well as a top producer of materials and precious metals including gold, copper, lead, and zinc.

Investors looking for access to Peru's markets have traditionally been forced to do so through the use of broad Latin America ETFs and mutual funds such as the iShares S&P Latin America 40 Index Fund(ILF) and the Fidelity Latin America Fund (FLATX). However, in 2009, the iShares launched the first pure play on this nation's markets in the form of the iShares MSCI All Peru Capped Index Fund(EPU).

Though EPU's index consists of 26 constituents, like many other single-nation emerging market ETFs, the lion's share of its portfolio is dominated by its top holdings. In this case, Cia de Minas Buenaventura(BVN), Southern Copper (PCU), and Credicorp(BAP) together account for over 40% of the fund's total index.