NEW YORK ( TheStreet) -- 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, with high concentrations in single sectors or companies.
Readers should be aware that the fund may present liquidity concerns for larger investors, because it has a low three-month average daily volume of only 6,200 shares. This means that the ETF should not be used for quick or large trades and is best suited as a small allocation in a mid- to long-term focused portfolio. The fund tracks an index of the 20 most liquid stocks in the Colombian market and the ETF is very much centered on its two largest holdings. The company that receives the largest allocation of net assets is the oil and natural gas corporation, Ecopetrol S.A. ( EC), which is also the largest company in Colombia. The company accounts for 20.1% of the ETF, while the second-largest holding, a bank called BanColomobia S.A. ( CIB), receives an 18.6% allocation. The next-largest holding (by comparison), Banco de Bogota, only accounts for 5.3% of GXG. In total, the top 10 holdings account for 78.6% of the ETF and banks are the largest sector allocation at 29.3%. Oil and gas, financial services, utilities, industrials, consumer goods, consumer services and telecommunications are the other sectors represented by GXG, and they receive allocations of 19.1%, 16.9%, 10.2%, 9.6%, 5.9%, 5.4%, and 2%, respectively. In the past year, GXG outperformed all other Latin American country-specific large-cap ETFs. Its year-to-date performance has also been better than the large-cap funds for Peru, Chile, Brazil, or Mexico. Since the start of 2010, GXG has increased by 10.2% and in the trailing one-year period, it increased by 136.6%. There certainly are risks to an investment in Colombia via GXG, such as domestic security concerns there and the low volume of the fund itself, but as the recent performance figures show, if investors bet right, the pay-off has the potential to be lucrative. Part one of this series covered the Mexico ETF and part two analyzed the Chile ETF.