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The Hangover: Mexico ETFs Drop After Cinco de Mayo


Mexico based equities have been punished for most of the month of May, with the largest ETF in the category, EWW (iShares Mexico, Expense Ratio 0.52%) finally taking a breather today on its 200 day MA after trading significantly lower yesterday intraday ($67.62) on very heavy trading volume.

EWW has amassed $2.7 billion in AUM and first came to market way back in 1996, making it an unquestionable ETF veteran.

The ETF may be considered rather top heavy (47 total holdings), as America Movil (17.02%), Fomento Economico Mexicano SAB de CV (9.17%) and Wal-Mart de Mexico (6.03%) are the top three weightings, and 60.34% of the portfolio’s assets rest across the top ten fund holdings.

Other ETFs linked to Mexico that have seen some uptick in activity at these technical levels are UMX (ProShares Ultra MSCI Mexico, Expense Ratio 0.95%) and SMK (ProShares UltraShort MSCI Mexico, Expense Ratio 0.95%), which respectively deliver two times the daily return and two times the daily inverse return of the MSCI Mexico Index (the same one that EWW tracks).

In terms of exposure to Mexican equities across the ETF landscape, GSGO (ALPS/GS Momentum Builder Growth Markets Equities and U.S. Treasuries Index, Expense Ratio 1.29%) has a considerable weighting to Mexico (30.59%), as well as a noteworthy dearth of volume or activity in the fund itself (debuted in December of last year).

Other ETFs with notable weightings to Mexico include FLN (First Trust Latin America AlphaDEX, Expense Ratio 0.80%), GGEM (EGShares Consumer Goods, Expense Ratio 0.85%), and EEML (iShares MSCI Emerging Markets Latin America, Expense Ratio 0.49%) to name a few.

Mexico is not alone in its recent swoon, as ECH (iShares MSCI Chile, Expense Ratio 0.59%) and EPU (iShares MSCI All Peru, Expense Ratio 0.59%) are also well off of their highs, both seeing accelerated trading volume on the recent decline.

AMX stock is clearly weighing on EWW, but its top position in terms of weighting in ILF (iShares Latin America 40, Expense Ratio 0.50%) isn’t really holding the ETF back from a performance standpoint because the index has its highest weighting in Brazil (52.97%) and the renewed surge in EWZ (iShares MSCI Brazil, Expense Ratio 0.60%) looks encouraging to bulls. Other top holdings in ILF rounding out the top five are PBR, ITUB, BBD, and VALE (all being Brazil based).

iShares MSCI Mexico ETF

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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