On Wednesday, BlackRock, Inc. (BLK) said that the company intends to double its $13 billion asset portfolio in Mexico in the next three years. The company enjoys huge demand for Exchange Traded Funds (ETFs) by many foreign and institutional investors.

Black Rock’s major business interest in Mexico is the iShare group of ETFs. In December 2009, the company had acquired Barclays Global Investors and the iShare ETFs from Barclays plc (BCS), for $13.5 billion.

Through the Mexican Stock Exchange’s (MSE) international system of quotations, BlackRock offers 133 ETFs and 12 are listed on the exchange. Half of these 12 ETFs are of the Mexican government and corporate-bond ETFs and the other half are of Mexican equities ETFs that also includes iShares Naftrac ETF.

Last year, iShares had acquired Naftrac ETF, the largest and first exchange-traded fund (ETF) in Mexico and Latin America. The iShares Naftrac ETF is a main portfolio for local pension funds and keeps tab on Indice de Precios y Cotizaciones (IPC), which is a Mexican stock market index.

In the past three years, the MSE has witnessed a huge growth in the number of ETFs that were listed on its international segment. According to the data available with Bolsa Mexicana de Valores SAB, the MSE had 14 local and 275 international ETFs at the end of May 2010, a huge jump from the 5 local and 108 international ETFs in 2007. MSE is a subsidiary of Bolsa Mexicana de Valores SAB.

Last week, BlackRock listed 9 new ETFs on the MSE’s international segment, of which 6 are focused on the European market. The company believes that Mexican capital market is growing by leaps and bounds, and its close ties with the U.S. are expected to create a prime focus for foreign investment in the next few years. BlackRock expects to tap the demand for investment, which is boosted by the Mexico’s mandatory pension system, corporate treasury desks and mutual funds.

The closest peers of BlackRock, Legg Mason Inc. (LM) and Franklin Resources Inc. (BEN), do not trade in ETFs, giving an advantage to BlackRock.

Hence, with the increased penetration into the Mexican capital market, BlackRock is expected to enhance its market share and revenue base leading to earnings growth in future.
Read the full analyst report on “BLK”
Read the full analyst report on “BCS”
Read the full analyst report on “LM”
Read the full analyst report on “BEN”
Zacks Investment Research