Should ETF Investors Reconsider Latin America?

Latin American stock markets have performed poorly in recent years, but Brazil has seen a rebound since the beginning of the year. Is it time to invest?

Caroline Gutman 5 June, 2015 | 11:27AM
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Caroline Gutman: Despite faring poorly last year, some investors are beginning to reconsider investing in Latin American emerging-market equity as oil prices go up and interest rates and yields begin to rise. Emerging-market valuations have been considerably lower than developed markets, so there's long-term potential for outperformance as well as portfolio diversification.

But investors need to be able to stomach the short-term volatility and should be aware of the potential for political instability in the individual countries. Take Brazil, for example, which by far is the largest country in the region and the largest economy. It's expected to post its worst recession in 25 years. However, over the last few months, Brazil has seen a slight market rebound. The Bovespa Index is up over 20% since January; thanks to President Dilma Rousseff's efforts to restore consumer and investor confidence, which include raising taxes, cutting government spending and raising interest rates.

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Caroline Gutman  is a passive fund analyst for Morningstar

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