iShares Latin America 40 ETF

ILF

Market cap $3.78B

iShares Latin America 40 ETF is reiterated as a "Buy," supported by attractive valuation and technical support near the 200-day moving average. ILF trades at a low 9.8x P/E, offers a 2.90% yield, and is heavily weighted toward Financials and Energy, with no Tech exposure. Momentum has cooled, but cyclical sector dominance and July seasonality suggest a favorable near-term risk/reward profile.

Although not uniform across the region, a number of Latin American equity markets have outperformed the S&P 500 year to date (YTD). Emerging markets in Peru, Colombia, Brazil, and elsewhere have all beaten the S&P's 9% YTD returns, thanks to a combination of factors, including higher prices for certain commodities, growing AI-related demand for outputs such as copper, lithium, and nickel, and favorable company valuations.

The iShares Latin America 40 ETF has surged over the past year, along with many individual country markets in the region. Latin America benefits from commodity booms and favorable political trends, but ILF may miss out on key growth themes like rising middle-class consumption. The portfolio is heavily tied to Brazil and doesn't offer much diversification around the region's smaller countries.

A tentative U.S/–Iran ceasefire has reignited risk appetite across emerging markets, driving more than $1.1 billion into U.S.-listed EM ETFs and snapping a four-week streak of heavy outflows, reported Bloomberg.

Jay Pelosky says geopolitical tensions are accelerating a rotation out of U.S. equities and into international markets. He discusses new leadership in emerging markets as AI‑linked names like Nvidia (NVDA) experience stock de-ratings.

Markets have been uneven to start 2026. Major indexes have struggled to make sustained progress, former technology leaders have traded lower, stress in areas such as private credit has added to the noise and a hot conflict in the middle east compounds the uncertainty.

iShares Latin America 40 ETF offers exposure to the region's forty largest public companies. ILF's portfolio is heavily concentrated, with approximately 82% in Brazil and Mexico, limiting true regional diversification. Recent performance and long-term track record are strong, precluding a sell rating despite structural concentration concerns.

Global stocks are still outperforming US shares so far in 2026, extending last year's winning run. Using a set of ETFs through yesterday's close (Jan. 21), all the major equity regions of the world are maintaining a healthy lead over the US.

iShares Latin America 40 ETF has surged 57% since late 2022, driven by strong regional equity performance. ILF offers diversified exposure to Latin America's largest companies, with a 0.47% fee and nearly 5% dividend yield. Valuations remain attractive versus the MSCI EM Index, with a P/E of 13.7, despite the recent bull run.

The iShares Latin America 40 ETF invests in large-cap companies, primarily in Brazil, Mexico, and Chile. The ETF's zero percentage allocation to the information technology sector makes it appealing for investors looking to hedge risks associated with AI valuations. ILF is overweight in cyclical sectors such as financials, materials, and energy, making returns more volatile and dependent on the economic cycle.