The iShares MSCI Chile ETF (NYSEARCA:ECH) achieved an impressive return of 70.33% in 2025, driven primarily by escalating copper prices and significant political changes in Chile. This remarkable performance outpaced major indices, including the S&P 500, yet it garnered little attention amidst the broader market focus on technology and cryptocurrency investments.
Chile is a critical player in the global copper market, supplying approximately 25% of the world’s copper. The rally in copper prices boosted profits for local mining companies, heavily influencing the performance of the ECH fund. Despite its niche status and a relatively small asset base of $1 billion, ECH has emerged as one of the standout investment vehicles of the year.
Copper Prices and Market Dynamics
The relationship between Chilean equities and copper prices is deeply intertwined, given that mining firms dominate the fund’s holdings. Notably, three companies—Sociedad Química y Minera de Chile (SQM), Banco de Chile, and LATAM Airlines—account for nearly 40% of the ETF’s portfolio. SQM alone represents about 14% of the fund’s assets, with Banco de Chile and LATAM Airlines each making up 12%.
Recent fluctuations in copper prices, particularly following labor disputes at a major Chilean mine, have reinforced the upward trajectory of ECH shares. The demand for copper remains robust, driven by sectors such as electric vehicles and renewable energy, while supply constraints due to mining accidents and strikes continue to limit production. As such, investors are encouraged to monitor copper futures on the London Metal Exchange for insights into ECH’s future performance.
Interest Rate Cuts and Political Shifts
Throughout 2025, Chile’s central bank cut interest rates from 5.75% to 4.5%, with the final reduction of 25 basis points occurring in December. These lower borrowing costs have stimulated economic activity and supported equity valuations across various sectors, enhancing the overall market landscape for investors.
Political developments have also played a crucial role in shaping market sentiment. The strong performance of right-wing candidate Jose Antonio Kast in the November 2025 presidential elections indicated a shift towards more market-friendly policies. This has reduced the political risk premium that had previously burdened Chilean assets, fostering a more favorable investment environment.
Investors should remain vigilant about the concentrated nature of ECH’s holdings. The fund’s performance can significantly hinge on the fluctuations of its top companies, particularly as LATAM Airlines continues its recovery from pandemic-related challenges, and the banking sector benefits from a stabilizing economy.
For those primarily interested in copper exposure, alternatives like the Global X Copper Miners ETF (NYSEARCA:COPX) offer a more direct investment route. With assets totaling $3.5 billion, COPX provides greater liquidity and a diversified portfolio of global copper miners, minimizing political and currency risks while still capturing the dynamics of copper price movements.
Overall, the future of the iShares MSCI Chile ETF is closely tied to copper prices, which must hold steady amid ongoing supply challenges. Investors should closely monitor quarterly earnings from the fund’s key positions and the broader commodity market to gauge potential trajectories for ECH moving forward.
