Industry Updates

Chilean ETF investors may be betting on politics, will the gamble pay off?

David Tuckwell

South America has the second smallest ETF market, ahead of only Africa. But the market is about to get one larger thanks to the Chilean issuer EuroAmerica listings the EuroAmerica MSCI Chile Small Cap ETF (EASCCHI).

EASCCHI will track the MSCI Chilean Small Cap Index, which is made up of small caps that are listed in Santiago. (More information about the fund is available in Spanish (click here).

The Chilean stock market has grown nearly 40% this year. Its staggering bull run rocket-fueled by hopes that its Harvard-educated billionaire ex-president Sebastián Piñera can win the election. It's possibly for this reason that the US-listed iShares MSCI Chile Capped ETF, the biggest Chile ETF in the world, has seen its asset boom 50% in recent months.

Investors planning on using ETFs to bet on politics should be careful. Piñera was initially predicted to cruise to victory but has been forced into a second round runoff against a socialist candidate. The Chilean stock market dropped 6% as first round election results came in, showing both how volatile the Chilean stock market can be and how influenced it is by politics.


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