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ETFs With Latin American Exposure Hammered On Trump Fears

Thursday, November 10, 2016 12:01
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In the post U.S. Presidential election shakeout, volatility is back in the markets, and whippy swings in stocks this morning has made trading in size at specific levels very difficult — especially in international markets.

EEM (iShares MSCI Emerging Markets, Expense Ratio 0.67%)) for example is down another 2.6% after yesterday’s freefall on heavy volume, and the fund has seen about $820 million leave the fund in the trailing one-month period. We are seeing some stunning one and two day moves in things like EWZ (iShares Brazil, Expense Ratio 0.62%), which is down >7% just today alone, and in EWW (iShares Mexico, Expense Ratio 0.49%) which is down an additional 6% after yesterday’s bloodbath. While Brazil makes up about 8% of EEM and Mexico (4%), the the largest holding within the portfolio, China, is down marginally during the past two days.

While Russia, RSX (VanEck Vectors Russia, Expense Ratio 0.63%) only makes up 3% of EEM, we have to point out that it was strong yesterday and for part of today before some profit taking occurred on the notion that a Trump Presidency would ease tensions between the country and the United States. The most interesting story in the Emerging Markets ETFs perhaps concerns Latin America, though as we had mentioned the two largest ETFs in the segment EWZ and EWW seeing severe weakness on the Trump victory.

Still, EWZ has seen moderate inflows ($10 million in) this week. EWW, on the other hand saw huge trading volume and larger inflows before the U.S. Presidential election on a fierce upswing, only to reverse sharply on even heavier trading volume to plunge to its lowest levels in since January of this year.

ILF (iShares Latin America 40, Expense Ratio 0.49%) is the third largest ETF in the “Latin America Equity” category with $1.1 billion in assets under management, and this fund alike is also under immense pressure the past couple days having its highest country exposures to Brazil (53%) and Mexico (24%). The fund is now trading at its lowest levels today since mid-September. Unfortunately, in combing through the U.S. listed ETF landscape we do not see any “Bear” offerings at the moment for hedgers or traders to use to brace for additional downside in this segment.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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