Top 10 Latin America Single Country ETFs

NEW YORK ( ETF Digest) -- Latin America offers some of the most dynamic growing economies. Some offer a significant reserve of natural resources highly sought after by developed economies from the U.S. and now China and India. Also significant are positive demographics with a younger population and rising middle class. This indicates strong consumer growth providing another area of positive investment opportunities.

There is currently an expanding list of 18 ETFs oriented to individual or regional Latin American countries whether small-cap or even subsectors. The following analysis features a fair representation of ETFs available. We believe from these investors may choose an appropriate ETF to satisfy the best index-based offerings individuals and financial advisors may utilize.

ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones, Van Eck, Global X and so forth. While many ETFs listed here fill important niches many are quite new and have lower star ratings until they season longer, and for us, become technically easier to analyze.

Where competitive issues exist and/or repetitive issues available at a fee cost saving we mention those as other choices. New issues are coming to market consistently.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12-month simple moving average (MA) when enough data is present to view markets. When prices are above the moving average, stay long, and when below remain in cash or short.

Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

#10: Global X Argentina ETF (ARGT)

ARGT follows the FTSE Argentina 20 Index which measures the top 20 companies that have high revenues or assets in Argentina. The fund was launched in March 2011. The expense ratio is .75%. AUM (Assets under Management) equal $4 million which is understandable for a new fund and is featured here because of the importance of the market. ARGT completes the range of countries (with Venezuela the exception) in Latin America away from Pioneer Funds. Average daily trading volume is less than 5K shares. As of late February 2012 the annual dividend is 2.54%  and YTD performance was 9.80%.

The current government led by Kirchner-Fernandez coalition has lately been menacing private companies and even saber rattling over the Falklands once again. The leadership seems power hungry and embracing some Chavez-like themes. Caution is advised in this regard. Lastly, Argentina defaulted on its debt over a decade ago and is still trying to reach a deal with remaining creditors. Caution with this administration is advised.

Data as of First Quarter 2012

ARGT Top Ten Holdings & Weightings
  1. Tenaris SA ADR (TS): 20.18%
  2. Mercadolibre, Inc. (MELI): 8.83%
  3. Arcos Dorados Holdings Inc (ARCO): 8.48%
  4. YPF Sociedad Anonima ADR (YPF): 8.38%
  5. Macro Bank, Inc. ADR (BMA): 5.42%
  6. Telecom Argentina SA ADR (TEO): 4.91%
  7. Nortel Inversora SA ADR (NTL): 4.79%
  8. Petrobras Argentina SA ADR (PZE): 4.15%
  9. Yamana Gold, Inc. (AUY): 4.12%
  10. Silver Standard Resources, Inc. (SSRI): 4.03%

#9: Global X Brazil Consumer ETF (BRAQ)

BRAQ follows the Solactive Brazil Consumer Index. This is the most popular in a series of Brazil ETFs launched by Global X at the same time which include: (BRAF: financials) and BRAZ, mid-cap ETFs). The fund was launched in July 2010. The expense ratio is .77%. AUM equal $37 million and average daily trading volume is 13K shares. As of late February 2012 the annual dividend is 1.26% and YTD performance was 23.47%. The one year return was 5.15%.

The clear positive is demographics in Brazil which indicate a young population with an expanding middle class. This makes the consumer sector more compelling. The fund trades commission free at ETrade and Interactive Brokers.

Data as of First Quarter 2012

BRAQ Top Ten Holdings & Weightings
  1. Hypermarcas S.A. (HYPE3): 5.70%
  2. Anhanguera Educacional Participacoes S.A. (AEDU3): 5.21%
  3. Raia Drogasil S.A. (RADL3): 5.09%
  4. Brazilian Distribution Company ADR (CBD): 4.96%
  5. Lojas Americanas S.A. Pfd Shs (LAME4): 4.93%
  6. Tam SA (TAM): 4.81%
  7. Lojas Renner S.A. (LREN3): 4.81%
  8. CIA Hering SA (HGTX3): 4.74%
  9. JBS SA (JBSS3): 4.65%
  10. Cosan Ltd (CZZ): 4.64%

#8: iShares Brazil Small-Cap ETF (EWZS)

EWZS follows the MSCI Brazil Small-Cap Index which measures the performance of the small cap Brazilian equities market. The fund was launched in September 2010. The expense ratio is .59%. AUM equal 57 million and average daily trading volume is 28K shares.

As of late February 2012 the annual dividend yield is 2.25% and YTD return 21.74%. The one year return was -1.53%.

Data as of First Quarter 2012

EWZS Top Ten Holdings & Weightings
  1. Br Properties Sa (BRPR3): 5.41%
  2. CIA Saneamento De Minas Gerais-COPASA MG (CSMG3): 4.04%
  3. Marcopolo S.A. (POMO3): 3.53%
  4. Gafisa SA (GFSA3): 3.46%
  5. Iochpe-Maxion (MYPK3): 3.43%
  6. Estacio Participacoes S.A. (ESTC3): 2.34%
  7. Mills Estruturas e Servicos de Engenharia SA (MILS3): 2.33%
  8. Confab Industrial SA: 2.25%
  9. Iguatemi Empresa de Shopping Centers S.A. (IGTA3): 2.22%
  10. Randon S.A. Implementos E Participacoes: 2.19%

#7: Global X Colombia ETF (GXG)

GXG follows the FTSE Colombia 20 Index is a market capitalization index of the most liquid 20 stocks in the Colombia market. The fund was launched in February 2009. The expense ratio is .78%. AUM equal $134 million and average daily trading volume is 163K shares. As of late February 2012 the annual dividend yield is 1.05% and YTD return 15.04%. The one year return was 5.67%.

The fund trades commission free at ETrade and Interactive Brokers. With the free trade agreement with the U.S. trade should improve in both directions.

Data as of First Quarter 2012

GXG Top Ten Holdings & Weightings
  1. Ecopetrol S.A. ADR (EC): 14.76%
  2. BanColombia SA ADR (CIB): 13.25%
  3. Pacific Rubiales Energy Corp. (PEGFF): 8.85%
  4. Grupo Aval Acciones Y Valores Grupo, Bogota: 6.09%
  5. Compania Colombiana De Inversiones SA, Bogota: 5.29%
  6. Grupo de Inversiones Suramericana SA (XGSUR): 5.07%
  7. Corporacion Financiera Colombiana SA: 4.64%
  8. Inversiones Argos: 4.60%
  9. Interconexion Electrica Sa Esp, Bogota: 4.60%
  10. Cementos Argos SA: 4.58%

#6: iShares Peru ETF (EPU)

EPU follows the MSCI All Peru Capped Index which measures the entire Peruvian market. The fund was launched in June 2009. The expense ratio is .62%. AUM equal $416 million and average daily trading volume is 234K shares. As of late February 2012 the annual dividend yield is 2.50% and YTD return 13.50%. The one year return was -6.48%.

The attraction for investors in Peru is the overwhelming mineral and precious metals resources the country offers in addition to good consumer demographics. Political conditions remain chaotic as usual.

Data as of First Quarter 2012

EPU Top Ten Holdings & Weightings
  1. Buenaventura Mining Company Inc. ADR (BVN): 18.35%
  2. Credicorp Ltd (BAP): 16.34%
  3. Southern Copper Corporation (SCCO): 10.55%
  4. Volcan, Compañia Minera S.A.A. (XVOLB): 4.84%
  5. Hochschild Mining PLC (HOC): 4.38%
  6. Alicorp S.A.A: 4.33%
  7. Minsur SA Minsur: 4.02%
  8. Grana Y Montero SA Gramon, Lima: 3.97%
  9. Sociedad Minera Cerro Verde Saa, Lima: 3.24%
  10. Intergroup Financial Services Corp: 3.14%

#5: iShares Chile ETF (ECH)

ECH follows the MSCI Chile Investable Market Index which like other MSCI indexes follows a proprietary methodology of creating an appropriate index. The fund was launched in November 2007. The expense ratio is .61%. AUM equal $676 million and average daily trading volume is 195K shares. As of late February 2012 the annual dividend yield was 1.65% and YTD return was 14.57%. The one year return was -6.04%.

Investors mistakenly believe and investment in Chile is a direct investment in copper miners which isn't the case as many are nationalized. There is indirect benefit to the economy naturally. The demographics in the country are excellent and the political situation is business friendly.

Data as of First Quarter 2012

ECH Top Ten Holdings & Weightings
  1. Empresas COPEC SA (COPEC): 9.70%
  2. Soc Quimica Y Minera Chile B Common Stock Npv: 8.12%
  3. Cencosud SA (CENCOSUD): 7.39%
  4. Banco Santander Chile (BSANTANDER): 7.25%
  5. Empresa Nacional de Electricidad SA (Chile) (ENDESA): 7.15%
  6. Enersis SA (ENERSIS): 6.68%
  7. Empresas CMPC SA (CMPC): 5.06%
  8. Lan Airlines SA (LAN): 4.76%
  9. CAP SA (CAP): 4.76%
  10. S.A.C.I. Falabella (FALABELLA): 4.42%

#4: Van Eck Brazil Small-Cap ETF (BRF)

BRF (Van Eck Brazil Small Cap ETF) follows the Market Vectors Brazil Small-Cap Index which follows small-cap companies deriving at least 50% of their revenues from Brazil. The fund was launched in May 2009. The expense ratio is .62%. AUM equal $724 million and average daily trading volume is 285K shares. As of late February 2012 the annual dividend yield was 2.43% and YTD 22.94%. The one year return -12.16%.

Brazil small caps will no doubt include much of the consumer sector which makes the sector more volatile but perhaps more rewarding dependent on technical conditions.

Data as of First Quarter 2012

BRF Top Ten Holdings & Weightings
  1. Totvs S.A. (TOTS3): 4.92%
  2. Anhanguera Educacional Participacoes S.A. (AEDU3): 3.88%
  3. Tam SA (TAM): 3.48%
  4. Br Properties Sa: 3.36%
  5. Raia Drogasil S.A. (RADL3): 3.05%
  6. Santos Brasil Particpacoes SA: 2.89%
  7. Gafisa SA ADR (GFA): 2.57%
  8. M. Dias Branco S.A. Industria e Comercio de Alimentos (MDIA3): 2.48%
  9. Sul America S.A. (SULA11): 2.44%
  10. Odontoprev S.A. (ODPV3): 2.37%

#3: iShares Mexico ETF (EWW)

EWW follows the MSCI Mexico Investable Market Index which is the typical proprietary index covering the scope of the Mexican stock market. The fund was launched in March 1996. The expense ratio is .53%. AUM (Assets under Management) equal $1.2 billion and average daily volume is 2.5M shares. As of late February 2012 the annual dividend yield was 1.49% and YTD return 11.98%. The one year return was -.07%.

ProShares features ultra long and short leveraged ETFs for investors wishing to hedge of speculate on EWW.

Data as of First Quarter 2012

EWW Top Ten Holdings & Weightings
  1. America Movil, S.A.B. de C.V. (AMX L): 22.34%
  2. Wal - Mart de Mexico, S.A.B. de C.V. (WALMEX V): 11.03%
  3. Fomento Económico Mexicano, S.A.B. De C.V. (FEMSA UBD): 7.93%
  4. Grupo Mexico, S.A.B. de C.V. (GMEXICO B): 6.32%
  5. Grupo Televisa, S.A. (TLEVISACPO): 4.81%
  6. Grupo Financiero Banorte, S.A.B De C.V. (GFNORTE O): 4.01%
  7. Grupo Elektra, S.A. de C.V. (ELEKTRA): 3.95%
  8. Industrias Peñoles, S. A.B. de C. V. (PE&OLES): 3.85%
  9. Cemex, S.A.B. de C.V. (CEMEX CPO): 3.67%
  10. Grupo Modelo, S.A.B. de C.V. (GMODELO C): 2.82%

#2: iShares Latin America ETF (ILF)

ILF follows the S&P Latin America 40 Index which measures the performance of four Latin American equity markets: Mexico, Brazil, Argentina, and Chile. The fund was launched in October 2001. The expense ratio is .50%. AUM equal $2.1 billion and average daily trading volume is 1.5 million shares. As of late February 2012 the annual dividend yield is 3.02% and YTD return 13.88%. The one year return was -4.72%.

GML should also be a consideration. Global X Shares launched an Andean ETF (ASEA) in 2011 which is still relatively new and needing some seasoning. However, it's an interesting issue that should gain a following eventually.

Direxion offers leveraged long and short issues linked to this index for those interested in speculating or hedging.

Data as of First Quarter 2012

ILF Top Ten Holdings & Weightings
  1. America Movil SAB de CV (AMX L): 12.07%
  2. Petroleo Brasileiro SA Petrobras ADR (PBR.A): 10.89%
  3. Vale S.A. ADR (VALE.P): 10.19%
  4. Itau Unibanco Holding SA ADR (ITUB): 9.04%
  5. Bank Bradesco ADR (BBD): 6.76%
  6. Companhia de Bebidas das Americas Ambev ADR (ABV): 4.61%
  7. Wal-Mart De Mexico SAB de CV (WALMEX V): 3.51%
  8. Itausa Investimentos ITAÚ S.A. (ITSA4): 2.80%
  9. Fomento Económico Mexicano, S.A.B. De C.V. (FEMSA UBD): 2.76%
  10. BRF - Brasil Foods SA ADR (BRFS): 2.76%

#1: iShares Brazil ETF (EWZ)

EWZ follows the MSCI Brazil Index. The fund was launched in July 2000. The expense ratio is .61%. AUM equal $10 billion and average daily trading volume is 15M shares. As of late February 2012 the annual dividend yield was.2.28% and YTD return was 18.09%. The one year return was -4.54%.

Brazil overall is a rising star. It's moved beyond emerging market status from many different views. The country as noted previously has a strong consumer sector; but, in addition has vast natural resources and is energy independent.

ProShares offers leveraged long and short ETFs for speculators and hedgers for short-term use.

Data as of First Quarter 2012

EWZ Top Ten Holdings & Weightings
  1. Petroleo Brasileiro SA Petrobras: 10.84%
  2. Vale S.A. Pfd Shs -A-: 8.61%
  3. Itau Unibanco Holding S.A. (ITUB3): 8.51%
  4. Petroleo Brasileiro SA Petrobras (PETR3): 8.37%
  5. Banco Bradesco Sa Brad (BBDC4): 6.29%
  6. Ambev Cia De Bebid: 4.87%
  7. Vale S.A. (CIVAF): 3.32%
  8. Itausa Investimentos ITAÚ S.A. (ITSA4): 2.80%
  9. BRF - Brasil Foods SA (BRFS3): 2.42%
  10. Vale S.A. ADR (VALE): 2.25%

Our star ranking system is just one way to select the best ETFs in the category. The methodology we use with the stars ranking is below.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

Latin America has been one of the more dynamic regions for economic growth and market performance in previous market performance through 2010. In 2011 both economic and market performance have seen more volatility and uncertainty. Going forward when some uncertainties are removed the area once again should demonstrate a high degree of growth if a business friendly environment can be maintained. Newer leftist regimes are reasserting their influence in the region overall which is a negative. Also with better economic growth inflation fears will rise and authorities have been trying to contain these by increasing interest rates and/or raising bank reserves. 

New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

For further information about portfolio structures using technical indicators like DeMark and other indicators, take a free 14-day trial at ETF Digest . Follow us on Twitter and Facebook as well and join our group conversations.

You may address any feedback to: feedback@etfdigest.com   

The ETF Digest is long ILF, EPU, GXG & EWW.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.

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