Sectors to consider when investing in Latin America
To understand which sectors in Latin America have performed best, we studied the portfolios of the largest Latin America focused ETF — the iShares Latin America 40 ETF (ILF). This ETF invests 34% of its portfolio in the financials sector, 16% in the consumer sector, 15% in basic materials, and 12% in the energy sector. Further, 52% of its holdings are concentrated in Brazil (EWZ) equities with Mexico (EWW) and Chile (ECH) having 24% and 8% of exposure, respectively.
In 2017, the top three performing sectors in Latin American equities have been:
The transportation sector constitutes 0.1% of the ILF ETF. Year to date, transportation stocks have returned an average of 27% in the ILF portfolio. Aramex (ARMX), the Dubai-based logistics company, has driven the high returns for the sector.
The chemicals sector makes up 0.7% of the ILF ETF. Year to date, chemical stocks in the ILF portfolio have returned 18.4% on an average. Sociedad Química y Minera (SQM), the Chile-based chemical company has led returns in this sector.
The electrical space consists primarily of 4 stocks. During the year so far, electrics stocks in the ILF ETF have gained 16.3% on an average. ADRs of stocks like Enel Generacion Chile (EOCC), Cia Energetica De Minas Gerais S.A (CIG), Enel Americas (ENIAN) and CPFL Energia (CPL) have climbed 19.2%, 21.5%, 18.9% and 5.7% respectively.
The worst performing sectors in Latin America in 2017 have been:
- Real Estate
Year to date, stocks in these sectors have plunged 7.3%, 6.9%, and 6% respectively.