Investing without Borders

03/21/2017 2:50 am EST


Benjamin Shepherd

Analyst, Breakthrough Tech Profits, Global Income Edge and Personal Finance

American stocks are running so high, it might be time to send some money south. Mexican stocks have gained quite a bit of ground since their own "Alamo" experience in November, but they're still well below their pre-November highs. They also appear to be undervalued.

While we still don't have a clear picture of future U.S.-Mexico relations, especially in terms of trade policy, the simple fact is that the Mexican economy is healthy. The country's fourth-quarter gross domestic product came in better than expected despite weaker agricultural exports, clocking 2.4% year-over-year growth compared to 2.1% in the third quarter.

I wouldn't pick specific Mexican stocks to add to your portfolio. Instead, consider taking a small stake in an exchange-traded fund, such as iShares MSCI Mexico Capped ETF (EWW).

With net assets of $1.64 billion, EWW provides broad exposure to Mexican banks and other financials, plus consumer names and materials companies, all of which should post gains in line with Mexican economic growth. Year to date, EWW has returned 4.8%. The fund is a smart contrarian bet that much-maligned Mexico is poised to offer growth amid a volatile global investment climate.

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