Good News For Colombia, Good News For These ETFs?
Benzinga | Feb 08, 2013 01:25AM ET
The comments flew somewhat under the radar, but on Wednesday, Maria Fernanda Suarez, Colombia's director of the public credit office, said her country expects "good news" from ratings agencies at the end of the current quarter. Suarez made the comments carry a yield of just 4.22 percent .
One ETF that could benefit from falling Colombian yields is the Market Vectors LatAm Aggregate Bond ETF (BONO). Often touted as a way of getting exposure to Mexican debt, BONO features two Colombian issues among its top=10 holdings. Bonds denominated in Colombian pesos comprise eight percent of BONO's weight.
The Market Vectors Emerging Markets Local Currency Bond ETF (EMLC), which features broader regional exposure, has a 3.8 percent allocation to bond denominated in Colombian pesos. Colombia, South America's second-largest economy, accounts for 3.3 percent of the WisdomTree Emerging Markets Local Debt Fund (ELD). As a region, Latin America represents almost 31 percent of the actively managed ELD's weight.
Chile, Mexico and Peru all have higher credit ratings on the S&P scale than Colombia has, but over the past three years GXG has easily outperformed the comparable Chile ETF while offering lower volatility than its Chilean, Mexican and Peruvian ETF counterparts.
BY The ETF Professor
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