With the soaring popularity of emerging markets ETFs, it is
not unreasonable to assume that, at the very least, most
investors know a couple of countries in Latin America can be
accessed via ETFs. Plenty probably know there are a few Brazil
ETFs on the market and the iShares MSCI Mexico Investable Market
Index Fund (NYSE:
) is far from anonymous.
Add up the assets under management totals for EWW, the iShares
MSCI Brazil Index Fund (NYSE:
) and the iShares S&P Latin America 40 Index Fund (NYSE:
) the number is north of $12.1 billion. With that, it might be
difficult to fathom the concept of undiscovered LatAm ETFs, but
these funds are out there.
Many fit the bill as
small by assets and volume
, but home to large returns. Some brokers will continue ignoring
these ETFs. Smart investors will not.
First Trust Latin America AlphaDEX Fund (NYSE:
As is par for the course with many multi-country LatAm ETFs, the
First Trust Latin America AlphaDEX Fund is heavily allocated to
Brazil and Mexico. Latin America's two largest economies combine
for 91 percent of this ETF's weight. What separates FLN from its
rivals is the AlphaDEX methodology used to construct the
Using growth factors including 3-, 6- and 12-month price
appreciation and value metrics such as book value to price, cash
flow to price and return on assets, FLN avoids excessive weights
to the largest Latin American stocks such as America Movil (NYSE:
), Petrobras (NYSE:
) and Vale (NYSE:
Strikes against FLN include a small assets total ($6.3
million) and low volume. However, it should be noted the ETF is
up 4.8 percent in the past 90 days compared to a two percent gain
Market Vectors Latin America Small-Cap Index ETF (NYSE:
The Market Vectors Latin America Small-Cap Index ETF is a
surprising addition to this list given the soaring popularity of
small-cap emerging markets ETFs in recent years. LATM is now 31
months old and is neither large by assets ($13.8 million) nor
frequently mentioned in the mainstream financial press.
LATM's name is deceiving as 62 percent of its weight is
allocated to stocks with market values ranging from $1 billion to
$5 billion, implying the fund has plenty of mid-cap exposure.
Sub-$1 billion firms represent the remaining 38 percent.
Materials names are the largest sector weight at 28.4 percent,
but combine discretionary and staples stocks and that number is
27.6 percent. That indicates LATM gives investors some leverage
emerging markets consumer theme
. Year-to-date, LATM has outperformed the popular Market Vectors
Brazil Small-Cap ETF by nearly 300 basis points.
iShares MSCI Emerging Markets Latin America Index Fund
The iShares MSCI Emerging Markets Latin America Index Fund
debuted in January and on the surface, this fund appears quite
similar to its cousin ILF. America Movil, Petrobras and Vale
combine for about 24 percent of EEML's weight. That trio
represents about 31 percent of ILF.
There are other slight differences. EEML has an expense ratio
of 0.49 percent compared to 0.5 percent for ILF. The former holds
three times as many stocks as the latter. EEML's
price-to-earnings ratio of 19.19 and price-to-book ratio of 3.6
are just below the
the comparable metrics for ILF
The rub is that EEML does not get around to trading every day.
In fact, the last time the ETF traded was October 26. On the
other hand, EEML has outpaced ILF by almost 140 basis points in
the past three months.
For more on forgotten LatAm ETFs, click
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