Latin American ETFs - high performance, lots of risk
Exchange Traded Funds (ETFs) are all the rage these days. There are good reasons for it. ETFs can be traded like a stock, yet they are a form of index funds. They are more tax efficient than typical mutual fund. Most importantly, they allow us to focus our investments on very specific regions or even countries - something mutual funds do not do.
[June 2009] Well, it's been quite a ride since I originally wrote this lens.
On the positive side, Latin American ETFs remain a handy tool for diversifying your portfolio. They not only give you exposure to currencies other than dollar, but also allow you to play emerging markets, or commodities ( Chile ETF - linked to the price of copper - one of Chile's main exports ).
[June 2009] Well, it's been quite a ride since I originally wrote this lens.
On the positive side, Latin American ETFs remain a handy tool for diversifying your portfolio. They not only give you exposure to currencies other than dollar, but also allow you to play emerging markets, or commodities ( Chile ETF - linked to the price of copper - one of Chile's main exports ).
Latin American Exchange Traded Funds
In this spirit of making focused investments, this lens concentrates on Latin American and South American ETFs. Sadly, we do not have as many choices as one would expect, but on the positive side, one of the best performing ETFs falls into this category.
So what are the ETFs in question?
ILF, MXE, EWZ
So what are the ETFs in question?
ILF, MXE, EWZ
Brazil ETF - the superperformer
Brazilian economy has been on a tear for the last few years. With the commodities boom, Brazil, rich in mineral resources, has done very well.
One of the BRIC countries, it constitutes (along with India) the democratic and law abiding half of the BRIC ( the other two, Russia and China are dictatorships, where rule of law does not exist).
This makes Brazil an attractive market for investments. Being in South America, it is reasonably close to US, and away from major conflict areas in the world. As a result of these favorable factors, Brazilian economy has been doing well, and Brazilian ETF - ticker symbl EWZ - has had superb performance over the last few years - since January 2003 to January 2008 it is up 1000%.
One of the BRIC countries, it constitutes (along with India) the democratic and law abiding half of the BRIC ( the other two, Russia and China are dictatorships, where rule of law does not exist).
This makes Brazil an attractive market for investments. Being in South America, it is reasonably close to US, and away from major conflict areas in the world. As a result of these favorable factors, Brazilian economy has been doing well, and Brazilian ETF - ticker symbl EWZ - has had superb performance over the last few years - since January 2003 to January 2008 it is up 1000%.
Latin American ETF - no slouch either.
The Latin American ETF - ticker symbol ILF - is a large cap fund, tracking the S&P Latin America 40 index. It has done very well during the last few years. Since May 2003, it is up over 600%.
If you want exposure to Latin American economy,
and want to hold large, rich companies - this is the way to go. Since it is not a single country ETF, it gives you more diversification accross the region.
If you want exposure to Latin American economy,
and want to hold large, rich companies - this is the way to go. Since it is not a single country ETF, it gives you more diversification accross the region.
Mexico ETF - a mixed bag.
Mexico ETF - ticker symbol MXE is an Equity and Income etf. Since January 2003, it is up over 300%.
However, due to low trading volume, it can be quite volatile. As of April 2008, it is trading at roughly $25 - but within past 12 months, it was as high as $51 - so it has lost 50% of its value.
Thus if you decide to bet on MXE - be sure to have your protective stops in place.
However, due to low trading volume, it can be quite volatile. As of April 2008, it is trading at roughly $25 - but within past 12 months, it was as high as $51 - so it has lost 50% of its value.
Thus if you decide to bet on MXE - be sure to have your protective stops in place.
More info about ETFs
Unfortunately, ETFs come with some flaws - not all ETFs share all the flaws, but it is important to know what to watch out for.
There are 3 categories of flaws that one needs to think about:
1) low liquidity
2) US market impact
3) index imbalance
with the exception of QQQQ, SPY and DIA, almost all
ETFs will suffer from one or more of these problems. To read a more detailed discussion of these flaws, visit ETF FLaws
There are 3 categories of flaws that one needs to think about:
1) low liquidity
2) US market impact
3) index imbalance
with the exception of QQQQ, SPY and DIA, almost all
ETFs will suffer from one or more of these problems. To read a more detailed discussion of these flaws, visit ETF FLaws
Books about ETFs
The ETF Book: All You Need to Know About Exchange-Traded Funds
Avg. Customer Rating: 
Amazon Price: (as of 12/20/2009) 
Exchange-Traded Funds For Dummies (For Dummies (Business & Personal Finance))
Avg. Customer Rating: 
Amazon Price: $16.49 (as of 12/20/2009)
ETF Trading Strategies Revealed (Trade Secrets (Marketplace Books))
Avg. Customer Rating:
Amazon Price: $15.56 (as of 12/20/2009)
Create Your Own ETF Hedge Fund: A Do-It-Yourself ETF Strategy for Private Wealth Management (Wiley Finance)
Avg. Customer Rating:
Amazon Price: $40.50 (as of 12/20/2009)
Sector Trading: A Year in Exchange Traded Funds
Avg. Customer Rating: 
Amazon Price: $14.92 (as of 12/20/2009)
Other Investment books
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Sites to visit
Check out this lense for more ETF info
More about ETFs.
Couple other lenses to visit - to take a break from the money game:
Fun
and more fun
Back to money stuff:
Wealthencyclopedia.com
More about ETFs.
Couple other lenses to visit - to take a break from the money game:
Fun
and more fun
Back to money stuff:
Wealthencyclopedia.com
Sources for investment ideas
SmartMoney (1-year)
Amazon Price: $10.00 (as of 12/20/2009)
Kiplinger's Personal Finance magazine
Amazon Price: $12.00 (as of 12/20/2009)
Fortune (1-year)
Amazon Price: $19.95 (as of 12/20/2009)
Inc. (1-year)
Amazon Price: $9.97 (as of 12/20/2009)
Forbes
Amazon Price: $29.99 (as of 12/20/2009)
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