iShares MSCI Mexico ETF (EWW)

ETF iShares MSCI Mexico ETF (EWW) Overview

Profile:

ETF iShares MSCI Mexico ETF (EWW) is an exchange-traded fund (ETF) that seeks to track the investment results of the MSCI Mexico 25/50 Index. This index comprises large and mid-cap Mexican equities, aiming to capture roughly 85% of the Mexican equity market. EWW primarily invests in the energy, materials, and consumer staples sectors.

Objective:

The ETF aims to provide investors with exposure to the Mexican equities market, allowing them to capitalize on the potential growth of this emerging market economy. EWW seeks to track the benchmark index with a minimized tracking error.

Issuer:

BlackRock:

• Renowned asset management company with an established global presence and expertise in investment products.
• Strong track record of managing ETFs across various asset classes.

Management:

• BlackRock's experienced team manages EWW, leveraging their extensive market knowledge and research capabilities.

Market Share:

EWW is the largest Mexico-focused ETF by assets under management, commanding a significant market share within its specific niche.

Total Net Assets:

As of October 26, 2023, EWW had around $2.8 billion in total net assets.

Moat:

• First-mover advantage: EWW was the first Mexico-focused ETF listed in the US, establishing a strong brand recognition and investor base.
• Replicating a broad index: Tracking a well-established and recognized index like MSCI Mexico 25/50 offers investors diversification and eliminates the need for stock-picking.
• Experienced management: BlackRock's proven expertise in managing ETFs provides investors with confidence in the fund's performance.

Financial Performance:

• Historical performance: EWW has delivered positive returns over the years, generally keeping pace with the Mexican equities market.
• Benchmark comparison: The ETF has generally mirrored the performance of the MSCI Mexico 25/50 Index, demonstrating effective tracking.

Growth Trajectory:

The Mexican economy is projected to experience further growth in the coming years, potentially driving higher demand for EWW as investors seek exposure to the Mexican market.

Liquidity:

• Average trading volume: EWW enjoys high average daily trading volume, ensuring investors can easily buy and sell shares.
• Bid-ask spread: The bid-ask spread is typically tight, suggesting lower transaction costs associated with trading the ETF.

Market Dynamics:

• Economic outlook: Mexico's economic growth is influenced by various factors, including oil prices, trade relations, and domestic reforms.
• Sectoral trends: The performance of the energy, materials, and consumer staples sectors significantly impacts EWW's returns.
• Global market events: International economic and political developments can create volatility in the Mexican stock market.

Competitors:

• iShares Core MSCI Emerging Markets IMI ETF (IEMG)
• VanEck Vectors Latin America ETF (LAO)
• Xtrackers MSCI All World ex US Equity ETF (AWEX)

Expense Ratio:

EWW's expense ratio is 0.48%, indicating a relatively low cost to invest in the fund.

Investment Approach & Strategy:

• Tracking strategy: EWW employs a passive index-tracking approach, aiming to closely mirror the performance of the MSCI Mexico 25/50 Index.
• Composition: The ETF predominantly invests in large-cap and mid-cap Mexican equities, with a focus on the energy, materials, and consumer staples sectors.

Key Points:

• Largest Mexico-focused ETF with significant market share.
• Experienced management by BlackRock.
• Tracks a broad and recognized index.
• Provides exposure to the potentially growing Mexican equities market.
• Relatively low expense ratio.

Risks:

• Market risk: EWW's value is tied to the performance of the Mexican stock market, which can be volatile and impacted by various economic and political factors.
• Currency risk: As EWW invests in Mexican equities, investors are exposed to fluctuations in the value of the Mexican peso against the US dollar.
• Sector concentration risk: The ETF's heavy allocation to specific sectors like energy and materials can lead to heightened volatility if these sectors underperform.

Who should consider investing:

• Investors seeking exposure to the Mexican equities market.
• Investors with a long-term investment horizon and tolerance for emerging market risk.
• Investors who prefer a passive, index-tracking approach.

Fundamental Rating based on AI:

7.5/10

EWW demonstrates strong fundamentals as a well-established ETF with a reputable issuer, low expense ratio, and exposure to a potentially growing market. However, investors should consider the inherent market and currency risks associated with the fund.

Resources and Disclaimers:

Information for this analysis is gathered from publicly available sources such as the iShares website, BlackRock's filings, and Morningstar. This information should not be considered investment advice.

Please note that the information provided above is based on data available as of October 26, 2023, and may be subject to change.