Latin American ETF Posts Biggest Outflow in Year Amid Turmoil

  • Investors pull $33.8 million from regional ETF in January
  • Exchange-traded fund has tumbled 32% in past 12 months

Latin America’s largest region-wide exchange-traded fund posted the biggest outflow in a year as a selloff in commodities and heightened political turmoil dim the outlook for an economic recovery.

The $495 million iShares Latin American 40 ETF had $33.8 million in withdrawals last month, according to data compiled by Bloomberg. That’s the largest outflow since January 2015. It has tumbled 32 percent in the past 12 months, compared with a 22 percent drop for the iShares MSCI Emerging Markets ETF for developing nations.

Corruption scandals from Brazil to Mexico, a collapse in commodities and a plunge in currencies have all reduced appetite for Latin American assets. That’s also getting analysts predicting another year of economic contraction for the region at a time when the global activity is forecast to grow 3.3 percent, according to data compiled by Bloomberg.

“In Latin America, you have the commodity risk but also the political risk,” said Walter “Bucky” Hellwig, who helps manage $17 billion as a senior vice president at BB&T Wealth Management in Birmingham, Alabama. “The trend will probably be for more outflows for Latin American ETFs.”

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