These are heady days for global ETF markets. Last year alone, overall global exchange traded fund flows hit a new high of $1.5tn1, while the global ETF market saw a record $620.54 bn in net inflows between January and April this year2.
So just what is their appeal?
Our own research suggests investors appreciate the evolution and innovation in the ETF market, with exchange traded products embracing an ever-wider asset pool and range of investment strategies with expanding geographic reach.
Competitive costing, flexibility, transparency, and the strong diversification potential of ETFs are also proving attractive features in an increasingly uncertain world.
And while much of the ETF story to date has focused on North America and Europe, other markets, such as Asia are also catching the ETF bug. Elsewhere, ETF products are also attracting growing interest across Latin American markets, most notably Brazil, Mexico, Colombia, and Chile.
With managers and ETF Issuers increasingly looking to broaden their fund distribution, European domiciled products sales have tracked shifting regional investor appetites, with LatAm now firmly in the frame as an ETF distribution target. According to some estimates the LatAm ETF market is projected to reach $40bn+ in size by 20303.
The region continues to register significant ETF market growth. Many of these products are domiciled in Europe and distributed via cross-border UCITS fund wrappers.
| ETFs listed in Latin America* | |||
|---|---|---|---|
| Latin America | # ETFs Listings | # ETPs Listings | Assets (US$ Mn) Dec-24 |
| Brazil | 111 | 347 | 8,660 |
| Chile | 11 | 333 | 463 |
| Colombia | 3 | 57 | 1,781 |
| Mexico | 15 | 1,709 | 9,595 |
| Argentina | 0 | 9 | 641 |
| Peru | 1 | 336 | 95 |
| Total | 141 | 2,791 | 21,235 |
| *Source: ETFGI. As of end of December 2024. ETFGI data sourced from ETF/ETP sponsors, exchanges, regulatory filings, Thomson Reuters/Lipper, Bloomberg, publicly available sources and data generated in-house. Note, table based on the most recent data available at time of publication. Asset and flow data may change slightly as additional data becomes available. | |||
While ETF/UCITS ETF sales in the LatAm region have been buoyed by institutional investors such as local pension plans, especially in markets such as Mexico, we believe strong potential retail market opportunities could also emerge across regional markets over time.
The unique product features of UCITS (such as accumulating share classes that do not distribute but re-invest dividends) are proving popular with both Mexican retail investors and in offshore booking centres in the US and Canada.
Market diversity
Although the LatAm region offers significant potential for managers promoting ETF products, it is far from being a homogenized market. The region can prove challenging, thanks to local idiosyncrasies and fragmented investment cultures across its constituent countries.
Importantly, different regulatory rules can also apply from country to country, with some regimes more advanced and sophisticated than others. Illustrating this, Colombia’s institutional investor rules now allow direct ETF allocation as eligible instruments (via decree updates in 2024).
In Mexico, regulators recently cleared pension funds, or "Afores," to invest in US and international active ETFs, though all must go through an approval process to become eligible for purchase by the Mexican Afores and no active ETF has yet been approved. The funds have traditionally invested in passive ETFs.
Other local markets have also seen recent regulatory change. In Chile, for example, the local regulator (Comisión Clasificadora de Riesgo) changed its rules to allow for pensions to invest in actively managed ETFs following a registration and approval process.
Varied infrastructure
Market infrastructure also varies across the region. The Mercado Integrado Latinoamericano (MILA) integration project offers cross-border trading which can streamline access for EU issuers targeting the participating markets of Chile, Colombia, Mexico, and Peru via a unified trading infrastructure.
A new project, NUAM, also promises to bring even greater integration of the Colombian, Chilean and Peruvian stock exchanges via a wholly new cross country singular stock exchange.
Having a local presence or significant local knowledge may prove critical if managers are to win over local investors. In Colombia, for example, it can be key to work with local broker dealers to access local investors through LatAm ETF products.
A traditional route to market in the region is via European issuers partnering with global banks whose local branches are able to reach institutional and retail clients. Digital wealth platforms are also key conduits for retail and advisory distribution in some Latin American markets.
Some reports suggest issuers targeting Latin American institutional investors have found it difficult to gain the European scale required to access them4. Yet, again, significant support exists within European fund centres such as Dublin and Luxembourg which have huge expertise and which support asset managers targeting LatAm with UCITS ETFs and other products.
1FT. ETF flows obliterate previous full year record to hit $1.5tn. 17 January 2025.
2ETFGI Data/Funds Europe. Global ETFs draw $620.5bn in 2025 inflows. 19 May 2025.
3Mordor Intelligence. South America ETF Industry Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030). January 2025.
4ETF Stream. UCITS ETF entrants struggle to achieve scale required for LatAm distribution. 11 November 2024.
The views expressed are as of July 2025 and are for informational purposes only. Nothing contained herein is intended as a recommendation to buy or sell any security, or to invest in any particular country, sector or asset class.
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