Mexico took center stage in the U.S. market on Monday.
Exchange-traded funds with heavy exposure to Mexico caught a bid after the Trump administration said it reached a deal with Mexican trade officials that avoided tariffs, a move that ignited a rally in the broader markets as well.
The iShares MSCI Mexico ETF, which has 86% of its portfolio in Mexican assets, rose by nearly 3% in Monday's trading session.
But leaders in the ETF world are still preaching caution when it comes to investing in emerging markets. Christian Magoon, founder and CEO of Amplify ETFs, likened investing in Mexico to trading around President Donald Trump's daily emotions.
"It's a very interesting conundrum because you're kind of betting on President Trump's mood. Is he going to be harsher in these tariff negotiations? We saw him loosen up with Mexico. ... What is he going to do for China going forward?" Magoon said Monday on CNBC's "ETF Edge."
This uncertainty should give investors some pause when parsing their investment options around the globe, said Tom Lydon, editor and proprietor of ETFTrends.com.
"For the last 10 years, we've had a home-country bias here in the U.S. But, still, 55% of global capitalization is outside of the U.S.," he said in the same "ETF Edge" interview.
"They key is you need to go in and kind of pick the spots that are going to be the best," Lydon said. "Right now, do we have confidence investing in Brazil versus Mexico? Probably not. There's some other[s]: Russia, probably not. China, on the China trade, if they actually get a deal, we're going to see that popping."
In short, "all emerging markets aren't created equal," Lydon said. Magoon agreed, preaching discipline over the desire to seize on seemingly favorable trends in less-developed economies.
"I think you need to have discipline to own emerging markets," he said. "Demographics are on their side, they're a lot younger than developed nations like the U.S., and the growth rates are there. But you have to hold for the long term, and it's been difficult the last few years."