How to Get a Piece of Mexican Stocks
Retail investors looking to sample Mexico will find a limited number of ADRs (compared to China and Brazil), but a wealth of open-ended mutual funds and exchange traded funds that invest in the country.
There are 21 ADRs, from consumer to industrials to materials to food and beverages. The most widely held is America Movil — the leading wireless carrier in the region and controlled by Mexican billionaire Carlos Slim; others include Coca-Cola Femsa , Cemex and Fomento Economico Mexicano. These stocks are priced in dollars and trade on U.S. exchanges; investors can purchase them the same way as they would shares of a major U.S. company.
There is only one pure play ETF — iShares MSCI Mexico Investable Market Index Fund — but its top five holdings represent some 51 percent of the fund's holdings. Started in 1996, it is one of the oldest investment vehicles for Mexico, and with net assets of $1.2 billion, one of the largest.
The ETF generally mimics the MSCI Mexico Investable Market Index, and includes ADRS and shares listed on the Mexican stock exchange.
Many market strategists and money managers discourage retail investors from buying so-called single country funds and instead recommend buying regional or even more broad-based global ones to spread out risk. (More:Mexico...Surprising Land of Opportunity)
Most single country vehicles, mutual funds or ETFs, "tend to be pretty top heavy, and also concentrated sector-wise," says Bill Rocco of Morningstar.
Seven Latin AmericanETFs have 20 to 30 percent weightings, eight have 10 to 20 percent weightings, and a dozen weigh in at 9 to 12 percent.
There are currently nine mutual funds for that region with Mexico weightings of 20 percent or more.
The largest is Epiphany FFV Latin America A at 35 percent, as of June 30, according to Morningstar. Three of its top holdings are Mexican companies;Grupo Modelo, Coca-Cola Femsa and America Movil.
Fidelity's Latin American Fund is one the largest at $2.48 billion in assets, while BlackRock Latin America is one of the oldest; two of its top five holdings are Mexican: Movil and Fomento.
Dozens of other Latin American, global emerging market and international mutual funds have smaller Mexico holdings, around 5 percent.
Most of the funds mentioned invest the bulk of their capital in Mexican equities, which managers describe as a relatively small universe. Popular stocks traded on the Mexico Bolsa include Wal Mart de Mexico and Grupo Modelo.
The Federated InterContinental Fund, for instance, currently has nine Mexican stocks in its portfolio. Four are ADRs, while five are local.
Minimum investments range from $1,000 to $2,500.
Fees for the ETFs are lower than mutual funds, which typically run at least 1 percent; the iShares Mexico ETF, for instance, charges just 0.52 percent.
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