Yet the fund, which also carries a 0.61 percent expense ratio, offers an interesting contrast with its Peruvian counterpart. The Chilean economy, like the Peruvian economy, possesses vast mineral wealth and a fertile agricultural sector. But Chile’s large consumer class adds a source of economic stability.
The three Colombia ETFs on the market make it the most represented country in the region. Even though Colombia also has a strong reliance on the mining sector, these funds three have fared better than the ETFs focused on Peru and Chili.
The Market Vectors Colombia ETF (COLX) is down 12 percent year-to-date versus a 15 percent drop in the Global X FTSE Colombia 20 ETF (GXG). The iShares MSCI Colombia Capped ETF (ICOL), which debuted in June after all of the aforementioned Andean funds suffered big declines in the spring, is up roughly 6 percent since inception.
If you’d like to split the difference between the relative levels of development in these three countries, check out the Global X FTSE Andean 40 ETF (AND). The fund, which carries a 0.72 percent expense ratio, has stakes in the 40 largest and most liquid stocks in Colombia, Chile and Peru.
This fund hit its 52-week low yesterday, and is down 23 percent year-to-date and about 25 percent since launching in early 2011. That said, it did have a nice run-up between October 2011 and February 2013, and the fund’s chart indicates it could be setting up for another rally in the near future.
The key challenge for this ETF is not mining exposure. Rather, it’s a global perception that Andean economic activity is pegged to China. Yet as the years have passed, rising consumer spending has become a more central theme. Commodities still matter, but they matter less than before and will matter even less in the future as per capita GDP rates rise higher.
And this ETF is well-suited to profit from that economic transition. Top holdings include Colombian oil giant Ecopetrol, Peruvian financial services firm Credicorp and Chilean utility Enersis.
These Andean-themed ETFs have slumped badly in 2013, but emerging economic strength in the region sets the stage for a sustained rebound once the China/commodity concerns have blown over.
Indeed, the real test for these economies will be an ability to grow even in a depressed commodity environment. BlackRock's Landers and others believe that moment has already arrived for Chile and Colombia, and will soon arrive for Peru.