Top Performing Latin American ETFs – BRAF, COLX, ARGT
The 2014 FIFA World Cup is in full swing.
The soccer (or football as it’s known in most of the world) tournament holds the world’s attention captive for an entire month as the national teams for 31 countries battle it out for the championship.
This year the tournament is being hosted by Brazil. And it’s having a big impact on their economy. It’s expected to generate about 1 million jobs in Brazil.
The World Cup appears to be a positive for Brazilian stocks too. ETFs that focus on Brazil have been some of the top performers this year.
In fact, there are a number of ETFs that hold stocks from Latin America that are raking in some nice returns this year. Let’s take a look at the three of the top performing ETFs that hold stocks from Latin America…
Global X Brazil Financials (BRAF)
BRAF is the top performing Latin American ETFs this year. It’s up 18.6% year-to-date.
It comes as no surprise the host country of the 2014 FIFA World Cup also has the top performing ETF from this region. But this is more than just the World Cup impacting stocks.
Brazil has battled high unemployment, high inflation, and slow economic growth in recent years. And the people of Brazil are fed up with the current leadership.
We’ll likely see a new President elected in the upcoming election. And with it comes new ideas to revive their economy.
Investors are piling into ETFs focused on Brazil now to capitalize on the bullish momentum these events will create in the months ahead.
Market Vectors Colombia ETF (COLX)
COLX is enjoying a 15.1% surge to the upside in 2014.
The impressive performance of Colombian stocks is due to accelerating growth in this Latin American country.
In the first quarter, their economy expanded 6.4%. It was the best first quarter results since 2007 and easily beat the average prediction for 5.1% growth.
What’s more, the government raised their estimates for growth going forward.
In short, this is one emerging market that’s showing real strength right now.
If economic growth in Colombia is able to outpace other emerging markets, it should continue moving higher from here.
Global X FTSE Argentina 20 ETF (ARGT)
Another Latin American ETF with solid gains this year is the Global X FTSE Argentina 20 ETF. ARGT is up 7.6% year to date.
As the name suggests, this ETF is designed to track the top 20 companies in Argentina.
The investment case for stocks in Argentina is a bit convoluted.
The country is in danger of defaulting on their sovereign debt. Much of it is owned by US run hedge funds. And the court battle between the two sides has been ugly.
US courts have ruled the country must pay $1.5 billion owed to debt holders. But the President of Argentina said they won’t honor the ruling.
Despite these problems, ARGT is on the upswing. But with so much uncertainty, I would avoid investing in ARGT because of these issues.
Here’s the upshot…
The 2014 FIFA World Cup is shining the spotlight on the host country Brazil and other Latin American countries. These emerging markets offer tremendous upside but they also come with additional risk.
Good Investing,
Corey Williams
Category: ETFs, Foreign Market ETFs
