The Latin America iShare exchange-traded fund (ILF) which includes exposure to Brazil, Mexico, Argentina and Chile is normally seen to benefit from foreign direct investment. But surprisingly, according to U.S. Commerce Department data, investment from Latin America into America is growing faster than American investment in the region.
Latin American companies have grown in clout as they have shored up balance sheets and look beyond local markets by expanding their overseas reach. The Brazilian oil company Petrobas and aircraft maker Embraer are just two companies making big investments in US markets. Privatizations and market reforms coupled with stronger currencies are some of the reasons companies have been investing in US companies. Mexico is by far the largest Latin American investor in America and about 100,000 Americans now work for Latin American companies.
Keep in mind that 88% of the ILF basket is accounted for by Mexico and Brazil. Investors will soon get a chance to invest in a Chile ETF which is currently in the iShare pipeline and will likely be launched during the next 2-3 months.
By Carl Delfeld of the Chartwell ETF Advisor
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