The largest Mexico based ETF, EWW (iShares MSCI Mexico, Expense Ratio 0.49%, $1.78 billion in AUM), was trading with a $52 handle back in November prior to the U.S. Presidential election, but plunged sharply and suddenly to as low as a $42 handle within several days of the election.
After some toiling EWW is now starting to arrive back on even footing. This morning, EWW is up more than 2.2%, and challenging its 200 day MA for the first time since last November. Year-to-date, EWW has seen some outflows worth noting, to the tune of about $240 million on what has been choppy trading in the underlying equity market consisting of new recent lows in January, only to reverse sharply with a strong rally throughout February to the present day here in early March.
Clearly question marks related to future trade policy is top of mind here for those looking to invest in Mexico. How the Trump administration will ultimately handle trade with Mexico may eventually explain the volatility in the underlying market that we have witnessed.
Specific sectors that Mexico is very dependent on from a broad economy standpoint are Consumer Staples (24%), Basic Materials (22%), and Financial Services (15%), as the percentage weightings that these sectors make up in the market-cap weighted EWW demonstrate. From an individual name standpoint, we see the top holdings within EWW as follows: 1) America Movil SAB de CV (12.56%), 2) Fomento Economico Mexicano SAB de CV (8.19%), 3) Cemex SAB de CV (7.53%), 4) Grupo Financiero Banorte SAB (6.99%), and 5) Grupo Mexico SAB de CV (6.63%). It’s also worth noting that all of the sixty-two equity holdings in the portfolio are ordinary shares listed in Mexico and not ADRs.
If the recent strength in the Mexican equity market is sustainable, UMX (ProShares Ultra MSCI Mexico, Expense Ratio 0.95%) is certainly worth watching for bullish breakout trading potential, and there are also two small but interesting “Currency Hedged” Mexico Equity products that may catch attention if the Peso continues to fall versus the U.S. Dollar. These funds are DBMX (Deutsche MSCI Mexico Hedged Equity, Expense Ratio 0.50%) and HEWW (iShares Currency Hedged MSCI Mexico, Expense Ratio 0.51%).
The iShares MSCI Mexico Capped ETF (NYSE:EWW) was trading at $47.80 per share on Friday morning, up $1.13 (+2.42%). Year-to-date, EWW has gained 8.71%, versus a 6.46% rise in the benchmark S&P 500 index during the same period.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.