) -- Thailand and the

iShares MSCI Thailand Index Fund

(THD) - Get Report

have garnered a lot of attention in the last few weeks because of how well they performed in 2012.

THD was up 34% for the year and paid out a small dividend, too. When a new year starts, it is common to look back at what did well and question whether the good times will continue, but often the better investment choice is to invest in last year's laggards instead of last year's winners.

One such laggard in 2012 was the

iShares MSCI Chile ETF

(ECH) - Get Report

, which was up only 8% last year vs. a gain of 15% for the

iShares MSCI Emerging Market Index Fund

(EEM) - Get Report


ECH's underperformance may have been due to concerns about declining demand from China, which saw its economy slow. Chile sells a lot of copper to China.

But now there are hopes that China's economy will see a resurgence in 2013, and this week Beijing reported that GDP grew at a greater-than-expected 7.9%.

That could mean good things for Chile and ECH. And already in the first three weeks of this year, ECH has been outperforming EEM and even THD.

There are several top-down factors that make Chile a compelling investment. GDP growth estimates for 2013 are around 4.5%, unemployment was reported in December at 6.6% (down from 7.1%). What's more, Chile's central bank never had to lower rates to zero, while many other countries are still trying to get out from under the Great Recession. The current monetary policy rate in Chile in 5%.

One unique factor positively influencing the Chilean equity market is that in the 1980s the country instituted what amounts to privatized social security. Employees have a portion of their paychecks going into equity and fixed-income investments. This creates a constant demand for Chilean equities that is rare in emerging markets.

The largest sector in ECH is utilities at 21%, followed by financials at 18%, materials at 14% and consumer staples at 12%. Despite being heavy in utilities and financials, ECH has a trailing yield of only 1.7%. It's important to note, however, that ETF dividends can fluctuate and future dividends may not be at that same level.

Chile's future is linked to the fortunes of China and any other country that needs copper for construction. It would make little sense to be extremely bearish on China and invest in Chile.

At the time of publication, Nusbaum held shares of ECH. It was also a client holding.

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This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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