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Exchange Traded Funds Extend Global Reach in Mexico,Bringing New Investment Opportunities

27 April, 2014

As the fifth-largest U.S. sponsor of ETFs,or exchange-traded funds,WisdomTree (Nasdaq: WETF) has just announced a new deal with Mexican investment regulatory body CONSAR; a move that will substantially increase the more than $140 billion in assets already invested in Mexican pension funds.

“ETF adoption continues to increase throughout Latin America,” writes the Wall Street Journal following an interview with Luciano Siracuasano,chief investment strategist for WisdomTree. “We are pleased that 6 additional WisdomTree ETFs are approved for sale to Mexican pension funds,further expanding our global footprint.”

WisdomTree currently holds one of the largest footprints in Latin America,with Mexico trailing second only behind Chile in the region after making 13 of the asset management firm’s ETFs available to its pension plans. As Latin America’s second largest economy,Mexico is home to approximately 20 influential pension fund managers,with a combined total of more than $160 billion in assets.

“Mexican pension funds account for 22 percent of Mexican savings,and could double in assets by 2018,” reports the International Business Times. “It’s substantial.”

When looking at emerging markets,outflows from ETFs in 2013 totaled close to $11 billion according to recent reports by Investor’s Business Daily. The nation’s close geographical and economic ties to the U.S. have also helped make Mexico a favorite among conservative emerging market investors worldwide,prompting analysts to predict it will post GDP growth topping both the U.S. and Brazil in 2014. In fact,Banco de Mexico has kept its benchmark rates at a low 3.5 percent as inflation slowed earlier this year and the nation’s economy revealed new underlying strength in February after posting a trade surplus and boosting exports to 4.7 percent.

In addition,unemployment rates in Mexico are showing a steady decline thanks to a steadily growing job market,while opening up the energy sector to outside investment will provide a substantial inflow of new investment dollars in the immediate future. Finally,Mexico holds an excellent macroeconomic position,with a debt level that is well below 50 percent of its GDP and a low deficit of just 1.5 percent of its GDP. 

“Mexico looks more resilient than any other Latin American nation,” writes Nasdaq. “The economy is expected to resume 3 percent growth this year on rebounding internal and external fundamentals.”

The 6 newly approved WisdomTree ETFs are:

WisdomTree Equity Income Fund (DHS)
WisdomTree MidCap Dividend Fund (DON)
WisdomTree SmallCap Dividend Fund (DES)
WisdomTree Dividend ex-Financials Fund (DTN)
WisdomTree Europe SmallCap Dividend Fund (DFE)
WisdomTree Australia Dividend Fund (AUSE)


Previously,Mexico approved the sale of these 7 WisdomTree ETFs to its pension funds:
WisdomTree Total Dividend Fund (DTD)
WisdomTree LargeCap Dividend Fund (DLN)
WisdomTree Total Earnings Fund (EXT)    
WisdomTree Earnings 500 Fund (EPS)
WisdomTree MidCap Earnings Fund (EZM)
WisdomTree SmallCap Earnings Fund (EES)
WisdomTree Japan SmallCap Dividend Fund (DFJ)

According to Zacks Investment Research,the iShares MSCI Mexico Capped ETF (EWW) is another way to get in early on the nation’s economic boom. “Poised to surge in 2014,” Mexico is enjoying a historic degree of economic liberalization,making this emerging market ETF a smart choice. EWW tracks the MSCI Mexico Investable Market Index and is traded primarily on the Mexican Stock Exchange. As a capitalization weighted index,EWW is working to capture around 99 percent of the total market capitalization.

“Making its debut in March 1996,the fund now has more than $2.5 billion in assets under management,” writes Nasdaq. The assets are invested in 51 holdings. Consumer staples (21.9 percent),financials (20.06 percent) and materials (16.5 percent) are the top three sectors of the portfolio.” 

Click here to learn about more innovative ways to invest in Mexico’s growth right now!

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