Latin American equity ETFs have quietly beaten the S&P 500 (VOO) over the last two and a half years. Since August 2023, four of the five most-tracked LATAM funds outperformed the US benchmark, even though each one held a far smaller basket of stocks. The surprise is not just the returns. It is how concentrated those gains were.
The numbers are striking. The iShares MSCI Peru ETF (EPU) returned 153.3%, the Global X MSCI Colombia ETF (GXG) gained 84.6%, the iShares Latin America 40 ETF (ILF) rose 39.6%, and the Global X Brazil Active ETF (BRAZ) advanced 34.07%. The S&P 500 returned 65.1% over the same stretch. The only laggard was the iShares MSCI Mexico ETF (EWW), at 23.95%.
Why these ETFs beat the S&P 500 with far fewer holdings
The first thing to understand is that these funds are built very differently from the S&P 500. The US index holds about 500 names, while the LATAM ETFs in this story hold around 30 names on average. The broadest, iShares Latin America 40 ETF, is capped at 40 holdings by design. That gap matters because it changes the way risk and return show up in a portfolio.
In practice, these ETFs behave more like focused country or sector bets than broad market funds. Peru's ETF is heavily exposed to mining. Colombia's fund leans on a handful of banks, energy companies, and utilities. Brazil's results were driven by exporters and financials. That concentration helped the funds surge when their strongest sectors rallied.
Peru was the biggest winner, and commodities explain most of it
The iShares MSCI Peru ETF's 153.3% return was driven largely by gold and copper. Peru is one of the world's major copper producers and also ranks among the top gold producers, so the ETF's heavy materials exposure turned a commodity boom into portfolio gains. Southern Copper, Buenaventura, and Cerro Verde were central to that move.
This is why Peru's result matters so much for investors watching LATAM markets. It shows how a narrow equity universe can produce outsized performance when the macro backdrop is favorable. It also shows how quickly that same structure can reverse if commodity prices cool.
Colombia and Brazil were rerating stories, not clean earnings stories
Colombia's 84.6% gain came after the market spent much of 2023 at depressed valuations. Political uncertainty and skepticism around Ecopetrol weighed on prices, so part of the move was simply a re-rating as bad news stopped getting worse. That kind of rebound can be powerful, but it can also be one-off.
Brazil's 34.07% return, and the 39.6% gain in iShares Latin America 40 ETF, came from a different mix. High interest rates, a strong real, and export-heavy large caps such as Vale and Petrobras shaped the result. Large banks also helped. Here again, the gains came from a small group of names doing a lot of heavy lifting.
Mexico lagged, and that tells a different story
The Mexico Equity & Income Fund returned 28.8%, trailing the others by a wide margin. Mexico had to work through judicial reform concerns, weaker domestic demand, and slower growth expectations. Banxico's easing cycle helped valuations, but it did not create a strong earnings backdrop for the market.
That makes Mexico the clearest reminder that ETF performance is tied to the local economy, local politics, and local sector composition. Even when the peso helped USD-based returns, it was not enough to erase the drag from slower local growth and a market structure dominated by a few industries.
What retail investors in Latin America should take away
For Latin American retail investors, the practical lesson is simple: concentration can work for a while, but it is not free. These ETFs outperformed with roughly one-twelfth the number of holdings in the S&P 500, yet that same concentration also means bigger swings if commodities, rates, or politics turn against them.
Access, taxes, and currency also matter. US-domiciled ETFs face withholding tax issues for many foreign investors, and USD-denominated funds can rise or fall in local-currency terms depending on exchange rates. That means the return you see on a screen may not match the return in your own currency. We recently published a comprehensive series of articles detailing how US ETF investments are handled in every country.
Why this matters beyond one 2.5-year window
This data does not prove that Latin American equities are a better long-term bet than US stocks. It does show that, over this stretch, concentrated LATAM funds delivered returns that most global investors overlooked while they were focused on the S&P 500 and artificial intelligence trades.
For investors building a global portfolio, that is the real takeaway. Country ETFs can work as satellite positions when you understand what is inside them. In Latin America, the portfolio is often narrower than people expect. That can be a source of risk, and it can also be a source of outperformance.
Legal Notice: Education, not advice. Past results do not guarantee future returns. Investing always involves risks.
