DWS launches Latin America ex-Brazil ETF in US

Nov 7th, 2018 | By | Category: Equities

ETF STRATEGY NEWS! ETF Strategy is delighted to announce the launch of ETF Strategy Hub (hub.etfstrategy.com), an on-demand repository of webcasts, videos, podcasts and white papers. Debuting with Special Series on Technology & Innovation in China and the Digital Economy.


DWS has launched the Xtrackers MSCI Latin America Pacific Alliance ETF (PACA US) on NYSE Arca, providing exposure to equities from select Latin America countries.

Deutsche launches Latin America ex-Brazil ETF in US

The fund provides exposure to equities listed in Mexico, Chile, Colombia, and Peru.

The fund tracks the MSCI Latin America Pacific Alliance Capped Index which represents the broad equity universe of the Pacific Alliance bloc composed of Chile, Colombia, Mexico, and Peru.

The index is made up of a combination of the MSCI Mexico IMI, MSCI Chile IMI, MSCI All Colombia and MSCI All Peru indices.

MSCI Mexico IMI and MSCI Chile IMI include large, mid and small-cap securities, while MSCI All Colombia and MSCI All Peru target a minimum of 25 and 20 issuers, respectively.

Constituents are weighted by free float-adjusted market capitalization. The index aims to increase diversification by capping the weight of single issuers at 25% and the combined weight of all stocks above 5% at 50%. Additionally, no country may account for more than half of the total index exposure.

Mexico has reached its cap limit of 50%, while the next largest country exposures are Chile (22.5%), Colombia (14.2%) and Peru (12.5%). Stocks from the financials sector account for over a quarter (26.8%) of the total index weight, followed by consumer staples (19.1%), materials (17.4%), telecommunications (8.0%), and industrials (7.1%).

This approach to Latin American equities notably excludes Brazil which accounts for a massive 54.5% of the MSCI Emerging Markets Latin America Index.

This may be favourable for some investors as Brazil’s turbulent equity market in recent years has reflected the ongoing economic and political struggles faced by the country – The MSCI Brazil Index has shown an annualized standard deviation of 34.0% over the past five years compared to just 16.2% for the Pacific Alliance index.

The fund comes with an expense ratio of 0.45%.

It is the first broad Latin American ETF to offer targeted exposure to the Pacific Alliance bloc of countries.

Other funds providing access to the region include the iShares Latin America 40 ETF (ILF US) which houses over $1.2 billion in assets under management. This fund tracks the S&P Latin America 40 Index, consisting of 40 blue-chip companies in the region selected by an index committee. It is slightly more expensive with an expense ratio of 0.48%.

Alternatively, for cheap access to the region, investors may wish to consider the Franklin FTSE Latin America ETF (FLLA US) which launched earlier this year and has an expense ratio of 0.19%.

Tags: , , , , , , , , ,

Leave a Comment