Battle For Inflows: Brazil (EWZ) vs. Mexico (EWW) vs. Chile (ECH)

by on April 19, 2013 | ETFs Mentioned:

As the U.S. market slowly walks the road to recovery, many investors who avoided the short-term effects of the recession are now left looking for a long-term solution for slow American economic growth. There are a number of popular investing options in the Latin America Equities ETFdb Category, but three funds best illustrate the difference between country specific and broad exposure: the MSCI Brazil Index Fund (EWZ, A-), the MSCI Mexico Index Fund (EWW, A) and the MSCI Chile Index Fund (ECH, C+).

Parinacota Volcano in ChileWhile targeted emerging country equity ETFs can be a great holding for investors who are well versed in the political and economic landscape of the country, those looking to break into the Latin America market should take time to make sure the ETF they invest in has strong inflows [see also How To Pick The Right ETF Every Time].

Meet the Competitors

Out of all the Latin America Equities on the market, EWZ, EWW and ECH are the three largest single country funds, holding between $575 million and $7.5 billion in total assets under management. Chile’s ECH features a heavier tilt towards mid cap  industrials and utilities, while both EWW and EWZ focus more on larger cap firms in the consumer goods industries. [try our Free ETF Head-To-Head Comparison Tool].

The Bottom Line

Interest in emerging markets has surged in recent years, and investors have embraced ETFs as the preferred means for accessing this asset class. All of these emerging markets received more attention than ever before between 2008 and 2011 when many investors fled the failing developed markets for far more lucrative investments. But now, as domestic markets for developed investors continue to push through the recession to reach new highs, investors are running back home and abandoning some international funds. EWZ has been especially hard hit, as the sliding Brazilian economy has found it difficult to keep its momentum from previous years. Chile, on the other hand, has remained a dominate focus in South America and EWW is bringing in more investors than ever before.

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Disclosure: No positions at time of writing.