NEW YORK ( ETF Expert) -- Hedge fund guru Jim Chanos has been telling investors to avoid China like the plague.
He's been slamming the world's second-largest economy for many years. In May, Chanos described China as being in the midst of an epic property bubble. Fair enough. Chanos sees parallels between the U.S. meltdown and China's "ghost towns."
Yet, there's one fact that Chanos can't gloss over. The
Guggenheim China Real Estate Fund
has gained 37% year-to-date and is sitting atop 52-week highs.
Granted, the China Shanghai Composite may have diminished by 17% or more in 2012. And the popular
iShares China 25 Index Fund
may be flat on the year.
Yet, those that have paid attention to the popularity of REITs abroad are not so surprised by the success of Guggenheim China Real Estate.
Similarly, why would anyone invest in Mexico? Haven't there been countless drug cartel attacks over the border? Didn't real estate activity along the Baja Peninsula dry up completely in the 2008 collapse? Aren't there consistent border squabbles related to immigration policy uncertainty?
In spite of well-documented troubles, Latin America's second largest economy may indeed overtake the more widely discussed Brazil. With 80% of its exports going to the U.S., Mexico's fortunes seem tied to the quantitative easing policies of the U.S.
Equally impressive, countries like China have shifted manufacturing costs (and jobs) to Mexico where wages are still significantly less than they are north of the border.
In sum, the road may have been rocky for
iShares MSCI Mexico
in 2012. Yet, it is a road where 20%+ gains are better than many emerging markets and most developed markets. Moreover, the current price of EWW is above both a 50-day and a 200-day trendline.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.