3 Reasons Chile's ETF Is Hot

Chile's exchange traded fund (ETF) is one of the top-performing single-country ETFs so far this year. If you dig deeper, you might find a lot to like about this fast-growing economy.

By all appearances, Chile's economy has reached its pre-2009 growth levels. Economic activity in the country rose 6.6% year over year in May. The drop-off in output caused by February's earthquake appears to have come back, too. Oxford Economics reports that reconstruction is now adding to the rebound in domestic demand, the main driving force behind the recovery. [The Vast Appeal of Frontier Market ETFs.]

Carla Pasternak for Street Authority is also bullish on Chile right now:

  • This country produces more copper than any other nation in the world. It produces five times as much as the United States.
  • Natural resources have certainly propelled the country, but global business is also a huge factor. Many of the larger tech companies have set up shop there.
  • Its economy has rebounded strongly from last year's recession. In fact, The Economist forecasts that the economy will grow at +4.7% this year and +6.0% next year.

Randy Woods for Bloomberg reports that central bank policy makers increased the rate by 0.50% to 1.5% in July, while benchmark interest rates will likely return to at least neutral levels of about 5.75% in 18 months. Interest rate hikes are needed to keep the economy from overheating while it recovers further. [Latin America's ETF Hot Spots.]

  • iShares MSCI Chile Investable Mkt Idx (NYSE: ECH  ) : 19% of this fund is materials.
  • First Trust ISE Global Copper (Nasdaq: CU  ) : Although Chile is not a holding in this fund per se, many of the mining companies in this fund have properties in Chile.
  • Global X Copper Miners (NYSE: COPX  ) : Like CU, there is no exposure to Chile, but these miners have properties there.

For more stories about Chile, visit our Chile category.

Tisha Guerrero contributed to this article.

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First Trust ISE Global Copper Index is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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