Chile Leads the Latin Pack

Everyone is talking about China. Do not miss the opportunities in other CHI ..

Yes. Chile with an "LE" not "NA" 

While the region is back in the favor of investors, it seems appropriate that Chile's mark. Economic star of Latin America

Chile is about twice the size of Montana and has an incredible coastline of 2650 miles. While only 3% of the land is arable, it has an amazing variety of climates and rich agricultural production. It gained its independence from Spain in 1810 and has 16 million inhabitants, of which 90% is Catholic.

Chile The story is somewhat similar to Ireland for its economic takeoff. From 1978 to 1988, the per capita income was only $ 100 to $ 1,510 to reach.

Then, both a military government followed by democratically elected governments initiated reforms of the labor market and opened the economy. Exports and foreign investment declined and debt came down. Foreign investors in Chile are treated in the same way as Chilean investors.

Chile's Take Off and steady growth 

From 1991-1998 economic growth rose by an average of 8% and income per capita based on purchasing power has grown to $ 10,700. Since then, growth has slowed to a 4-5% range, but a total Chilean public and external debt at 50% of GDP is very low compared to other Latin countries.

Trade is very important for Chile with exports accounting for 25% of GDP. It is rich in natural resources (copper, wood, fruit and fish) and has been busy signing free trade agreements. A free trade agreement (FTA) with the U.S. came into force in January 2004 and now 90% of Chilean exports to the U.S. enter duty free. After a similar trade pact with South Korea last year, exports increased by 50%.

Current President Ricardo Lagos Escobar is under pressure to improve economic growth and bringing the stubbornly high unemployment 8% down. On the positive side, inflation and interest rates low at 2-3%. Chile has demonstrated fiscal discipline and has both a trade surplus and a budget surplus.

How to take advantage 

There are no country-specific ETFs for Chile, but there is the Chile Fund (CH), which is a closed-end fund managed by Credit Suisse Asset Management. It is an increase of 53% in the last year, traded at a 7.7% discount to intrinsic value and sports a yield of 4.6%. Keep in mind that 19% of the fund invested in only one copper company Empresas Copec SA and the annual fee is high at 1.80%.

Another alternative would be the iShares Latin America 40 (ILF) that invests in Mexico, Brazil, Chile and Argentina. It is an eye opening of 67% over the past twelve months with an annual fee of only 0.55%. Currently, 49% of these exchange-traded fund invested in Brazil, 38% in Mexico, 10% in Chile and 3% in Argentina.

Interested investors can also consider the ADR for Banco Santander (SAN) that is an excellent sofa and a good measure of the total economy. It is an increase of 42% over the past year and an increase of 11% so far this year. Banco Santander is one of the 30 companies in the Chartwell Global 30 Index, which is an alternative to the Dow Jones Industrial Average.

About: Carl Delfeld is head of global consulting firm Chartwell Partners and is editor of the "Chartwell Advisor" and "Asia Investor Intelligence" newsletters. He served on the Board of Directors of the Asian Development Bank in Manila and is the author of The New Global Investor (iUniverse: 2005). For more information go to or call