iShares MSCI Peru and Global Exposure ETF

EPU

Market cap $203M

iShares MSCI Peru ETF is up 60% YTD, driven by a metals rally, but currently rated "Hold" due to stretched technicals. EPU benefits from high exposure to mining and materials, with a 3.55% yield and strong momentum, but faces elevated volatility and liquidity issues. Valuation has risen with a P/E of 16x and a less compelling PEG ratio; portfolio is concentrated in materials and financials, notably SCCO and BAP.

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%.

Latin American equities have outperformed the U.S. market in 2025, and Peru is among those winners year-to-date. Peru's political instability and upcoming elections present significant risks, particularly when compared to other countries in the region. EPU's mining focus benefits from high commodity prices, but the lack of diversification will be a drag if metals prices slide.

Peru offers an attractive investment opportunity with low debt, low valuations, and strong economic growth, despite high risk. iShares MSCI Peru ETF focuses heavily on Basic Materials and Financials, making it a sector play with high volatility. Peru's healthy economy, low inflation, and strong GDP growth, coupled with rising copper demand, support EPU's potential.

Peru's economy, driven by the mining sector, offers good growth potential with a 7.5% CAGR in GDP from 2000-2023 and low inflation rates. Peru's exposure to the global copper market is very positive as EVs are widely adopted, and power grids are upgraded around the world. A significant proportion of EPU's holdings are represented by companies whose main operating market is not Peru.

Peru's stock market has outperformed regional peers, despite economic challenges, and equities remain reasonably valued. The economy is poised for substantial recovery in 2025, with recent GDP growth hitting its highest since Q1, 2022. Despite a 40% market run in the past year, future economic developments are not fully priced in, making it a good hold.

US equities have outperformed the rest of the world for a long time now. While the US is up 58% on a total return basis during the current bull market, the rest of the world is up 13.5 percentage points less at +44.5%. Looking at the international dividend ETF over a longer time frame, over the last five years, it's up 20.6% in price and more than double that on a total return basis.

Peru offers macroeconomic stability with strong fundamentals and growth potential, supported by new mining projects and structural reforms. iShares MSCI Peru ETF provides targeted exposure to Peru's resource-driven growth, with top holdings in the financial and materials sectors. EPU outperformed competing ETFs this year, but its concentration in top holdings poses risks if commodity prices drop or Peru's economic situation worsens.

Investors seeking momentum may have iShares MSCI Peru and Global Exposure ETF EPU on radar now. The fund recently hit a new 52-week high.

The iShares MSCI Peru and Global Exposure ETF is heavily focused on copper-related stocks. Copper prices have been rising due to supply issues, benefiting companies like Southern Copper and driving the performance of the EPU ETF. The strength of copper also supports the Peruvian Sol, mitigating the impact of rate cuts on financial businesses like Credicorp.