Little-known Peru ETF on top of the world, thanks to gold

The iShares MSCI All Peru Capped ETF (EPU) is up 30% on the year, making it the best-performing single country ETF of all 196 such funds in existence
MAR 29, 2016
No one is happier to see this year's rebound in precious metals than an obscure Peru exchange-traded fund. The iShares MSCI All Peru Capped ETF (EPU) is up 30% on the year, making it the best-performing single country ETF of all 196 such funds in existence. This is nothing short of a miraculous turnaround for an ETF that had lost 53% in the three years prior to 2016. EPU's breakout year is largely due to its high allocation to — and dependence on — mining companies. While Peru ranks No. 52 in terms of GDP, or just ahead of Romania, it punches way above its weight when it comes to the mining of precious metals, ranking sixth in gold and second in silver. As such, EPU has a freakish 50% of its portfolio allocated to the materials sector. For comparison, no other single country ETF has more than 30% allocated to the materials sector. The heavy weighting to miners has been a bad thing in the past, but when gold and silver are up 16% and 11%, respectively, so far this year, it is a very good thing. It doesn't hurt that emerging markets in general have been coming back from a multiyear slump; beating the U.S. stock market for the first time in a long time in the first quarter of this year. Peru is barely represented, however, in the most popular emerging-market ETFs, because the country remains tiny in market value, barely registering in the popular iShares MSCI Emerging Markets ETF (EEM), which weights stocks by market cap, with a 0.40% weighting. Even the MarketVectors Gold Miners ETF has only 1.5% exposure to Peruvian companies. Peru is one of a number of "lost countries" that are small fish in big ponds. Others include Greece in the emerging-market bucket and Ireland and Israel in developed markets. Such countries slip through the cracks and as such are not really inside most investors' portfolios. This probably explains why EPU has more than $166 million in assets — which includes $28 million in new cash this year–despite being such an obscure single-country ETF. Those investors know they can't get Peru anywhere else. EPU comes with an annual fee of 0.62%.

Latest News

Independent contractor formerly associated with MML Investors Services charged with running Ponzi
Independent contractor formerly associated with MML Investors Services charged with running Ponzi

Trevor Uhls was charged with wire fraud and money laundering in a criminal complaint filed in U.S. District Court for the Western District of Missouri.

Osaic adds $367M multigenerational team from Ameriprise in Iowa
Osaic adds $367M multigenerational team from Ameriprise in Iowa

The multigenerational Cedar Rapids firm is joining through a key OSJ as recruiting competition heats up across the wealth space.

IRS floats eligible investment rules for Trump Accounts
IRS floats eligible investment rules for Trump Accounts

New Treasury guidance sets fee caps, defines index-tracking rules, and bars ESG-linked funds from the tax-deferred accounts for minors

Carson Group adds $405M Northwestern Mutual team in Atlanta
Carson Group adds $405M Northwestern Mutual team in Atlanta

Yari Capital's move to Carson continues a run of additions for the $62 billion firm, days after it hired a veteran recruiter from Osaic.

Wealth Enhancement inks 'coming home' deal with Oklahoma RIA
Wealth Enhancement inks 'coming home' deal with Oklahoma RIA

Servo Wealth Management's $210 million book brings the Minneapolis consolidator's total client assets further past $160 billion.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income