Tony's ETF Buyer's Guide: Latin America ETFs

Investing in Argentina ETFs

As of June 10th, the ETF Central screener shows exactly one ETF for targeted exposure to Argentina: the NYSE-listed Global X MSCI Argentina ETF

with around $303 million in assets under management.

This ETF has a 0.59% expense ratio and provides concentrated exposure to 25 market-cap-weighted holdings represented by the MSCI All Argentina 25/50 Index.

It is very top-heavy, with MercadoLibre currently holding a 22.75% weight. MercadoLibre is a leading e-commerce and FinTech company in Latin America, often compared to Amazon and PayPal due to its extensive marketplace and digital payment solutions.

ARGT hasn't been the most liquid of ETFs, with a 0.28% 30-day median bid-ask spread, largely because the underlying equities aren't as liquid as domestic ones. This should be considered as part of your total cost of ownership if you're planning on trading instead of buying and holding. However, it is fairly tax-efficient with a 0.74% 30-day SEC yield.

Investing in Mexico ETFs

Your options for Mexico ETFs are more varied, with the ETF Central screener showing three NYSE-listed options: two suitable for buy and hold, and one designed for traders.

First up is the iShares MSCI Mexico ETF

, a very old ETF dating back to March 12, 1996, and surprisingly liquid with a 0.03% 30-day median bid-ask spread. It tracks the MSCI Mexico IMI 25/50 Index and holds 43 stocks.

However, it is not very tax-efficient with a 2.43% 30-day SEC yield, so it's best held inside a tax-advantaged account like a Roth IRA. Also, like most iShares single country ETFs, it is somewhat expensive at a 0.5% expense ratio.

For those focused on low costs, the provider to watch is Franklin Templeton, whose passive international ETF lineup nearly always emphasizes low fees. For a 0.19% expense ratio, they offer the Franklin FTSE Mexico ETF

, which tracks the FTSE Mexico Capped Index. This ETF can also be used as a tax-loss harvesting partner for EWW.

Finally, for swing or day traders, there's the Direxion Daily MSCI Mexico Bull 3X Shares

. This ETF aims to deliver daily 3x leveraged returns of the MSCI Mexico IMI 25/50 Index. It is very volatile and not intended for long-term holding due to the effects of compounding. It also has a very high 1.25% net expense ratio.

Investing in Brazil ETFs

As one of the largest Latin American economies and a member of the BRICS coalition, Brazil has garnered significant attention from investors and, consequently, ETF issuers. According to the ETF Central screener, there are nine options available. Brazil is home to some big companies, mostly in natural resources like Vale and Petrobras.

For passive broad market exposure, you have the usual suspects from iShares and Franklin Templeton. The iShares MSCI Brazil ETF

emphasizes liquidity with a low 0.03% 30-day bid-ask spread but has a high 0.59% expense ratio. On the other hand, the Franklin FTSE Brazil ETF

FLBR

is refreshingly cheap with a 0.19% expense ratio.

If you prefer active management, there's the Global X Brazil Active ETF

with a 0.75% expense ratio. However, it hasn't been able to take off, with just $3.3 million in AUM and a wide 0.42% bid-ask spread.

Finally, you can also target specific market caps within this sector. If emerging markets aren't risky enough for you, consider targeting emerging market small-caps via an ETF like the VanEck Brazil Small-Cap ETF

. Keep in mind this ETF charges a high 1.09% expense ratio and has been very volatile, with a three-year standard deviation of 33.2%.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.