This Mexico ETF’s Post-Trump Recovery Has Been Impressive

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April 20, 2017 1:41pm NYSE:EWW

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There was considerable focus on Mexico after President Trump’s election last November and the largest ETF that tracks the country’s equity market, EWW (iShares MSCI Mexico Capped, Expense Ratio 0.49%, $1.3 billion in AUM) was initially pummeled for several months before recovering at the beginning of March this year.


At present levels, EWW is still about 6% off of its 52-week high of $54.33, but it has come a long way since trading in the low $40’s ultimately in January of this year. The Mexican Peso itself has been volatile as well since the election, rallying initially into January of this year before falling back to present levels.

The Mexican equity market itself has been tracking rather closely with greater Latin America in general as the largest broad based Latin America fun, also from iShares, ILF (iShares Latin America 40, Expense Ratio 0.49%, $1.1 billion in AUM) is only out-performing EWW head-to-head in the trailing six month period by a little more than 200 basis points. On the other hand, year-to-date thanks to a recent run, EWW has reversed that performance gap and is out-performing ILF by over 200 basis points.

Mexico has the second largest weighting within the ILF underlying index with a 24% weighting behind Brazil’s 51% allocation. For the moment at least, it appears that the initial knee-jerk sell-off in Mexico that occurred last November when Trump was elected was well overdone, as the country’s equity market has regained its footing to a large degree, and notably inside of the past two months.

EWW is by far the largest and most popular fund in the “Mexico Equity” space in ETF land, with its north of $1.3 billion in assets under management, as the next biggest fund in the space only has $9.4 million in AUM, and it is a leveraged long trading vehicle known as UMX (ProShares Ultra MSCI Mexico Capped, Expense Ratio 0.95%). While UMX has not seen any notable uptick in trading volume on the recent upswing in Mexico, it is still worth keeping an eye on if the bullish momentum continues in this market.

There are several other smaller ETFs in this segment that remain unrecognized by the majority of ETF investors and portfolio managers, judging by very low asset levels, and they are HEWW (iShares Currency Hedged MSCI Mexico, Expense Ratio 0.51%), DBMX (Deutsche MSCI Mexico Hedged Equity, Expense Ratio 0.50%), and SMK (ProShares UltraShort MSCI Mexico Capped, Expense Ratio 0.95%).

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The iShares MSCI Mexico Investable Market Index ETF (NYSE:EWW) was trading at $51.18 per share on Thursday afternoon, up $0.25 (+0.49%). Year-to-date, EWW has gained 16.40%, versus a 5.27% rise in the benchmark S&P 500 index during the same period.

EWW currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 20 ETFs in the Latin America ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul 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.


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