The pace of new ETF launches seems to be quickening. Today brought Market Vectors Latin America Small-Cap Index ETF (LATM), which combines two increasingly-popular niches: Emerging markets and small-cap stocks.

Latin America is not new territory for ETFs, of course. iShares S&P Latin America 40 (ILF) has been available for almost a decade, as have ETFs covering Mexico (EWW) and Brazil (EWZ). Small-cap exposure in those markets has been more difficult for U.S. investors. Van Eck began to fill this gap last year with their Market Vectors Brazil Small-Cap ETF (BRF).

LATM continues this trend with a slightly broader focus. Brazil is still heavily represented at around 43% of the LATM portfolio. Add in Mexico’s 23% and those two countries comprise about two-thirds of LATM. Investors might do a double-take to see that Canada at 19% is the third-biggest market in a “Latin America” fund. The U.S. and Australia are on the list, too, but do not be dismayed. The stocks domiciled in those places still derive most of their revenue from Latin America.

The distinction between large-cap and small-cap stocks may be more pronounced in Latin America than it is in developed markets. The big names in places like Brazil are often energy and natural resource exporters. Their fate is therefore closely tied to global growth. Small-caps tend to be more involved in the local economy. If your goal is to bet on internal growth in Latin America, LATM may turn out to be a much better prospect than ILF.

LATM will track a new benchmark, the Market Vectors Latin America Small-Cap Index. Van Eck believes this index more accurately represents country weightings according to regional GDP. In other words, LATM is not as Brazil-heavy as other Latin America ETFs but, as noted above, Brazil is still its largest market. Companies in the index must have a market capitalization of at least $150 million and meet certain liquidity requirements. LATM has a gross expense ratio of 0.68%, capped by the sponsor at 0.63% until May 2011.

LATM summary page

Van Eck press release (PDF)

LATM prospectus (PDF)