European investors have significantly increased their allocations to Latin American equities in 2026, directing more funds into the region than in any full calendar year since 2010. According to data from Morningstar, net inflows into Latin America-focused mutual and exchange-traded funds domiciled in Europe reached $3.6 billion this year. This marks a reversal from the previous 15 years, during which investors withdrew a total of $15.1 billion from these funds.
As a result of both these inflows and robust market performance, assets under management in European Latin American equity funds have surged to $21.6 billion, more than doubling since the start of 2025. The shift is largely attributed to Latin America’s resource-rich economies benefiting from rising commodity prices, with copper hitting record highs and oil surpassing $100 per barrel in the context of ongoing tensions between the United States and Iran.
Market analysts have identified the geopolitical conflict in the Middle East as a key trigger accelerating investor interest in Latin America. Eduardo Figueiredo, head of Asia and emerging market equities research at Aberdeen Investments, noted that Latin America gained traction as a “safe haven” after the outbreak of the war on February 28. Madeleine Black, an analyst at Morningstar, highlighted that the surge in oil prices amid the Middle East conflict, combined with heightened demand for copper driven by the artificial intelligence (AI) industry, has strongly influenced Latin American equities.
Brazil’s Petrobras and Grupo México, which manages the world’s largest copper reserves, have been major contributors to the region’s gains. Together, the two companies accounted for 40 percent of the Latin American equity returns this year. Their performances boosted the MSCI Emerging Markets Latin America index by 33.4 percent over the past 12 months, significantly outperforming the MSCI World index, which rose 18.9 percent, and the S&P 500, which increased by 18.2 percent over the same period.
Despite this growth, Latin America has lagged behind the MSCI Emerging Markets Asia index, which returned 41.8 percent in the past year, driven mainly by its dominant semiconductor producers like Taiwan Semiconductor Manufacturing Company, Samsung Electronics, and SK Hynix. However, some experts see this as an advantage. Mike Simpson, head of Latin American equities at Barings, said that Latin American markets offer diversification benefits by being less affected by the concentrated gains seen in technology-heavy markets, thereby providing investors with alternative return sources.
Political developments in the region are also contributing to the more positive investment outlook. Simpson pointed to recent elections in Chile, Peru, and Colombia, where market-friendly candidates have won, fostering expectations of economic stability and reform. Figueiredo added that political shifts in Mexico and Brazil are worth watching. In Mexico, the government under President Claudia Sheinbaum has adopted a more pragmatic approach, despite her left-wing affiliation. In Brazil, the upcoming October election features a contest between incumbent Luiz Inácio Lula da Silva and challenger Flávio Bolsonaro, who is perceived as more market-friendly.
Valuations remain attractive in Latin America compared to other major markets. The MSCI Latin America index trades at 12.5 times historic earnings, considerably lower than the Asia index’s 22.5 times, the MSCI World’s 26.3, and the S&P 500’s 30.3, suggesting potential for further growth amid current geopolitical and economic conditions.