Global X MSCI Colombia ETF

COLO

Market cap $113M

The Global X MSCI Colombia ETF (COLO) which covers 23 liquid stocks from the relatively inaccessible and low-profile Colombian equity markets is up by 45% this year. COLO will appeal to income investors and value investors, but investors could also face slippage risks because of the wide bid-ask spreads. Macroeconomic headwinds include slowing GDP growth, persistent inflation, and external trade pressures, tempering the bullish case for COLO.

It has been 225 days since President Trump's Inauguration on January 20th, and the S&P 500 entered today up 8% since the last close before the Inauguration. Speaking of the G7, the US has been the worst market among these seven developed nations since Inauguration Day in January. Along with being the second-best performing country ETF since Inauguration Day, Vietnamhas easily been the best performer since April 8th with a gain of 77.5%.

GXG remains a Buy with a $33 target, as Colombia's BRI move is unlikely to cause lasting damage to US relations or ETF holdings. GXG's ~5% dividend yield and diversified exposure to Colombia's top banks and energy firms provide attractive upside and insulation from geopolitical shocks. Anti-incumbent trends suggest a likely return to a US-aligned government in 2026, reducing long-term policy risk for GXG.

The S&P 500 (SPY) rallied 5.7% this week but remains down 5.4% since the close on "Liberation Day" on 4/2. The average country ETF is down 4% since 4/2, so SPY has underperformed that since Trump's Rose Garden announcement. Asian countries like Vietnam (VNAM) and Thailand (THD) had some of the harshest reciprocal tariffs announced on Liberation Day, and since the pause, these two have bounced back 16.7% and 14.1%.

International ETFs outperformed Wall Street in Q1 of 2025.

Wall Street has been upbeat in January, with the Dow Jones outperforming the S&P 500 and the Nasdaq.

Colombian equities remain attractively priced within MSCI Emerging Markets, presenting a compelling investment opportunity. Inflation should continue to improve in 2025. The Central Bank has already cut rates by 350bps since December 2023, with more cuts possible, enhancing growth prospects.

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