An Interesting Latin America ETF Riddle

Sure, we're barely more than a month into 2011, but it's never too early to start examining the one-month performance of some of 2010's emerging markets darlings in the ETF world. Not surprisingly, Latin America was home to many darlings in 2010, but several of those ETFs have gotten off to less-than-inspiring starts this year.

Here's a riddle to prove the point: What country was better than Brazil and Chile (in terms of January ETF performance), is home to violent drug cartels and looking to boost its oil production? The bit about drugs and oil is meant to throw you off, but if you guessed Colombia, you'd be right. However, if you want to find the ETF that has been the stalwart among Latin America country-specific funds in 2011, you'd have to turn the iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW).

Of ETFs tracking the aforementioned countries and Peru, only EWW is in the green this year and more gains could be on the way. On Wednesday, Bloomberg News highlighted the expanding of Mexico's Carlos Slim, the world's richest man. Much of Slim's fortune is tied to America Movil (NYSE: AMX), one of the largest telecom companies in Latin America and EWW's top holding at over 23% of the ETF.

Slim also benefited from his stake in Grupo Carso, another EWW top-10 holding, Bloomberg reported.

“With China overheating, and clearly Brazil looking like a very crowded trade, people are starting to look at Mexico as an alternative," Walter Molano, head of research at BCP Securities, told Bloomberg.

Sounds good. Celebrate Cinco de Mayo early with some EWW in your portfolio.