iShares Latin America 40 ETF

ILF

Market cap $2.33B

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.

Global equities strategies are having a moment this year. The SPDR S&P 500 ETF in isolation looks strong, posting an 18.3% year-to-date gain.

International equities have outperformed YTD but continue trading at discounted prices and valuations. Yields are generally quite good, if not outstanding. Lots of international equity ETFs out there. I'll be giving a quick rundown of four such ETFs in this article.

It's the year of foreign equities ETF diversification and performance. For many ETF issuers, their international or ex-U.S. ETF strategies have led their suites for performance amid rising domestic risks.

I recommend ILF for income-focused investors seeking emerging market exposure with a high and sustainable dividend yield and strong geographical diversification. ILF's portfolio is anchored in Brazil and Mexico, benefiting from financial innovation, commodity exports, and defensive sector allocations for stability. The fund's expense ratio is competitive, performance is driven by dividends, and valuation remains attractive for income rather than growth investors.

Global equities ex-US were already leading US stocks in 2025 by a wide margin ahead of the trade deal announced this week between the US and Japan. Vanguard International Stock ETF rose sharply yesterday, and is now up 21.8% year to date.

I am upgrading iShares Latin America 40 ETF to a buy, citing its strong YTD outperformance and improved momentum versus the S&P 500. ILF offers a compelling combination of low valuation (8.5x P/E), high 6.1% yield, and attractive PEG ratio, despite portfolio cyclicality risks. Technical analysis points to a bullish setup, with a breakout above $27 targeting $33, supported by double-bottom and RSI strength.

As global markets spiral from fresh tariff hikes, some emerging markets defy the chaos—surviving and thriving.

ILF offers exposure to Latin American markets, primarily Brazil and Mexico, but faces high volatility and political risks. The ETF has a high expense ratio of 0.48% and significant sector concentration, with financials dominating at 37.1%. Brazil's economic outlook is bearish due to potential interest rate hikes, while Mexico's situation is mixed with possible rate cuts halting.

The election victory has fueled a strong rally in US equities, but Trump's comeback is seen as a new risk factor elsewhere as Washington prepares to pivot to new edition of an “America First” policy. The latest surge in US shares has widened the lead for SPDR S&P 500 ETF (SPY) year to date.