2 ETFs for Carlos Slim fans
Use these funds to mimic the investments of the world's richest man.
By Don Dion, TheStreet
With a fortune totaling $53.5 billion, Mexico's Carlos Slim topped Forbes' 2010 list of the world's richest people, beating out notable names from around the world including Microsoft (MSFT) founder Bill Gates and Berkshire Hathaway's (BRK.A) chairman Warren Buffett. (Microsoft owns and publishes MSN Money.)
A major percentage of Carlos Slim's staggering fortune can be attributed to his telecommunications business. In particular, the wireless carrier under his command, America Movil (AMX), has seen impressive growth in recent years as rampant economic growth and expansion in the emerging markets have resulted in more consumers entering the mobile phone market.
Although his telecom-focused endeavors represent the bread and butter of his business empire, Slim's reach expands well beyond this sector, allowing him to profit from other market trends. For instance, the precious-metals industry appears to have played a major role in the growth of his wealth as well.
In the latter half of 2010, the investor's exposure to the gold and silver markets was dramatically expanded when Slim's conglomerate Grupo Carso announced that it was spinning off a precious metals mining company.
Using ETFs, it is possible for retail investors to mimic the business preferences of the world's richest man.
The iShares MSCI Mexico Investable Market Index Fund (EWW) is designed to target and track the performance of the largest and most influential companies in Mexico.
Although the fund's reach expands across the broad sector spectrum, some of the largest slices of the fund's index are set aside for Slim's empire. America Movil tops the fund's portfolio, accounting for nearly a quarter of its total portfolio alone. Telefonos de Mexico (TMX) and Grupo Carso, meanwhile, can be found listed within the fund's index as well, representing smaller slices.
While its heavy exposure to Slim's various business ventures makes EWW an attractive choice for fans looking to tap the mind of this multibillionaire, investors should avoid getting carried away when gaining exposure to this fund.
By dedicating a combined 33% of its portfolio to AMX and Walmart de Mexico, the fund's day-to-day action will rely heavily on their performances. In the event that either of these companies heads south, investors can expect EWW to take a heavy hit.
Another fund that may prove attractive to Slim followers is the GlobalX/InterBolsa FTSE Columbia 20 Index Fund (GXG). This week, the Mexican billionaire highlighted Colombia as an attractive investment destination. In a report from Bloomberg, the billionaire said he hopes to increase his exposure to the nation's energy industry.
GXG is well-designed for investors looking to tap this region of the nation's marketplace and will see a strong jump if its energy industry falls into focus. More than a third of its portfolio is dedicated to companies in the gas and oil industries, with leader Ecopetrol (EC) representing a 17% slice of the index.
As with EWW, it is important to use discretion when you're handing the GXG. In addition to being heavily weighted toward its top positions, this fund has traditionally struggled to gain interest from investors. Although it has picked up recently because of the growing popularity of emerging markets, the fund's average trading volume still fails to break the 100,000 mark. This can be troublesome for investors looking to move into and out of the fund quickly.
Looking forward to this year's list of the world's richest individuals, many are already forecasting that once again Slim will come out on top. Both EWW and GXG will be exciting to watch as the world's richest individual seeks to expand his fortune.
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