ILF - FLN: A Enhanced ETF That Suffers From Quite A Few Drawbacks

2025-05-29 17:32:39 ET

Summary

• FLN which follows an enhanced stock selection methodology while picking Latam stocks has outperformed EMs and global markets quite handsomely this year.
• We measure FLN against the standard ILF ETF, which is the largest Latam focussed ETF.
• 78% of FLN's holdings come from regions that are staring at a dispiriting growth outlook.
• The risk-reward on the long-term chart of FLN does not look favorable now.

Introduction

The little-known First Trust Latin America AlphaDEX ETF ( FLN ), with less than $13M in AUM, has been in dazzling form this year. While we are only five months into the new year, FLN is already up by 27%, which is roughly 3x the return profile of emerging markets (on average), and over 5x the return profile of global stocks (on average)....

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