7 Great Latin America ETFs

Among emerging market investments, Latin America is gaining momentum as the region where investors can make some big bucks. From Brazil ETFs to Chile stocks, returns in this investing region have been hot.

Participating in the booming Latin American markets of Brazil, Chile, Columbia, Mexico and Peru is possible via individual stocks.� Yet for the average investor, the better way to gain broad-based (and in some cases specialized) exposure to Latin America is through exchange-traded funds (ETFs).� Over the past decade, the palette of ETFs offering exposure to the best of Latin America has exploded, and there�s now enough for any international investing artist to paint a nuanced picture in his or her portfolio.

Although there are quite a few ETFs pegged to the fortunes of Latin America, there are seven that stand out in my mind for their combination of performance, diversity and specialization.� Let�s take a look at each of them now.

iShares MSCI Brazil Index (NYSE: EWZ).� This ETF allows you to essentially buy the biggest and best stocks on the Brazilian market. �Because Brazil is a country rich in natural resources, many of EWZ�s top holdings are in the commodity sector.� Stocks like oil and mining giant Petroleo Brasileiro (NYSE: PBR) and iron ore mining firm Vale S.A. (NYSE: VALE) are two of its biggest holdings, but you�ll also find banks and beverage companies among the top of EWZ�s list.

iShares MSCI Chile Investable Market Index (NYSE: ECH).� This fund allows you to participate in the growth of this South American nation, and that growth is likely to continue. In fact, on Wednesday Chile�s central bank revised its growth estimates higher, saying that it now expects gross domestic product growth of 5% to 5.5% this year, solidly above its previous projections for growth of 4% to 5%. Ironically, the renewed economic activity has been fueled in large part by reconstruction efforts prompted by the earthquake that hit the country in late February.� While the Chilean central bank may be guilty of what Bastiat called �the fallacy of the broken window,� there is no doubt that there is measurable growth taking place in Chile.

Global X/InterBolsa FTSE Colombia 20 ETF (NYSE: GXG). While I suspect many investors equate Columbia with some rather illicit exports, they may want to rethink that stereotype.� Colombia actually has a thriving economy that�s benefitted from legitimate exports such as petroleum, coal, gold, coffee and bananas.� This ETF concentrates its holdings in the 20 biggest and most liquid Columbia-based companies, including Petroleum Company Ecopetrol, BanColombia and Pacific Rubiales Energy.

iShares MSCI Mexico Investable Market Index (NYSE: EWW).� Many people put Mexico in the same category as Columbia in terms of the nation�s reputation for illegal imports and corruption in government.� While there certainly is that element, investors shouldn�t ignore the huge legitimate investment opportunities in our closest Latin American neighbor.� EWW allows you to participate in some of the biggest companies in Mexico, including telecom giant America Movil S.A.B. de C.V. (NYSE: AMX), Walmart de Mexico, a subsidiary of Walmart (NYSE: WMT), and infrastructure behemoth CEMEX, S.A.B. de C.V. (NYSE: CX).

Those are the country-specific funds that make up our list of the seven great Latin America ETFs.� Now it�s time to look at the more unusual ways to play this market segment.

iShares S&P Latin America 40 Index (NYSE: ILF).� This diversified ETF still contains a lot of exposure to Brazil (some 60%), but it also contains some of the best companies in Chile, Mexico and Peru.� This ETF gives you stocks like Petroleo Brasileiro, Vale S.A. and Walmart de Mexico, but it also gives you exposure to leading Chilean financial firm Banco Santander, S.A. (NYSE: STD).� ILF can be viewed as a sort of best-of-breed, big-cap ETF pegged to Latin America.

SPDR S&P Emerging Latin America (NYSE: GML).� This ETF is actually very similar to ILF in that it holds some of the biggest and best companies in Latin America, chiefly from Brazil, Chile, Mexico and Peru.� There�s also a lot of overlap in this fund when compared to ILF, including stocks like Petroleo Brasileiro and Vale S.A. There are, however plenty of different holdings between the two, as GML has over 100 holdings while ILF has only 34, so it�s okay to own both.

Direxion Daily Latin America Bull 3X Shares (NYSE: LBJ).� If you�re really bullish, I mean really bullish on Latin America, you can go for the gusto with this leveraged ETF.� LBJ seeks to achieve price performance that�s equal to 300% of the price performance of the S&P Latin America 40 index.� Basically, you�re getting ILF on steroids.

As you can see in the table below, of these seven Latin America ETFs (ranked here by year-to-date performance), Columbia�s GXG has been the best performer.� Not only is the fund up over 51% so far in 2010, it also has climbed over 35% in the past three months.� If you want to continue riding a winner, then Columbia is the place to be. Data is as of 9/8.

TICKER	Name	1MO%	3MO%	YTD%
GXG	Global X/InterBolsa FTSE Colombia 20 ETF	10.00	35.41	51.52
ECH	iShares MSCI Chile Index	8.19	29.63	29.04
EWW	iShares MSCI Mexico Index	-3.92	3.05	1.88
ILF	iShares S&P Latin America 40 Index	-0.19	10.79	-1.42
GML	SPDR S&P Emerging Latin America	-0.64	12.19	-1.45
EWZ	iShares MSCI Brazil Index	-0.83	12.96	-5.52
LBJ	Direxion Daily Latin America Bull 3X Shares	-2.83	34.20	-18.81

The table also shows the worst performer this year is the highly leveraged LBJ.� Though over the past three months the fund has surged, its poor start to the year has left it nearly 19% in the red year-to-date (as of Sept. 8).

The biggest takeaway from this data clearly is the recent surge in all seven of these Latin America ETFs over the past several months.� With domestic equities struggling with an epic battle between bulls and bears, the smart money now knows that the real bullish action is in Latin America�and that�s quite possibly where you should consider a visit with your portfolio.

As of this writing, Jim Woods did not own a position in any of the stocks named here.

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