Following the acquisition of Barclays Global Investors by BlackRock earlier this year, many industry analysts anticipated that the market-leading iShares line of ETF would soon begin around-the-globe expansion. They just might have known what they were talking about. According to Bloomberg, iShares recently announced that it plans to list ETFs on Chile’s stock exchange sometime next year and will expand its ETF operations to Peru and Colombia within 12 months.
While the use of ETFs is widespread in the U.S., the funds have been slow to catch on in less developed markets, due in part to the lack of large institutional investors that provide liquidity and depth to the market. BGI indicated that Chilean lawmakers are expected to approve market reforms shortly that would allow trading of the funds. The proposed changes that would allow ETFs to trade in the country are part of broad-based market reforms intended to increase trading volumes and improve liquidity. Chile is Latin America’s fifth largest economy, behind Brazil, Argentina, Venezuela, and Colombia.
iShares has great expectations for the acceptance of ETFs throughout Latin America. Axel Christiansen, BGI’s head of Chilean operations, points to the fact that ETFs account for about a third of total trading volume in Mexico as an indication of the huge potential in these as-of-yet untapped markets.
Disclosure: No positions at time of writing.