Mexico might be often associated with drug-related crimes, but the country’s steady economic growth is paving the way to some solid returns for investors tapping into ETFs such as the iShares MSCI Mexico Investable Market Index Fund (NYSEArca: EWW) or even accessing the country through fixed-income funds like Pimco’s Total Return Bond ETF (NYSEArca: BOND).

This week, Mexico reported second-quarter GDP growth of 4.1 percent year-on-year—its 10^th consecutive quarter of GDP growth and the first since President Felipe Calderon was elected to office—as domestic consumption and spending related to local elections helped offset a drop in exports, the Wall Street Journal reported.

Higher employment rates and growing credit also played a part in the country’s growth, which seems on pace to meet the government’s projection of 3.5 percent expansion for 2012. That growth pace is nearly twice the projected growth for the U.S., and is even ahead of Brazil’s GDP expansion that many expect to come in around 2.5 percent in 2012.

EWW is currently the only ETF focused solely on Mexican equities, aside from a bull-and-bear pair from ProShares, and the fund is already up some 15 percent year-to-date, coming ahead of the S&P 500 Index. iShares’ fund, which has more than $1.22 billion in assets gathered since its 1996 inception, is in fact one of the best-performing ETFs of all time, having posted annualized total returns of more than 17.6 percent, on average, for the past decade.

“Mexico has a great economy and a very bad PR problem,” Emerging Global Advisor’s President Robert Holderith said in a recent interview with IndexUniverse. “It is seeing 4-4.5 percent GDP growth steadily, it has a huge booming middle class, and yet the only headlines you read are on drug-related crimes.”

“The drug problem there is more of a headline problem than an economic problem, but people are slowly beginning to understand Mexico’s economic importance,” he added.

Domestic Demand Is Key Driver

Holderith emphasized that driving economic growth in many of these emerging markets such as Mexico today is booming domestic consumption rather than a focus on exports.

Mexico’s second-quarter growth of its services sector, indeed, outpaced industrial output expansion, coming in at a 4.4 percent year-on-year gain versus industrial’s 3.6 percent uptick, according to the WSJ.

Holderith is the man behind a regional-in-focus ETF that hones in on demand sectors and holds Mexico as its largest country allocation.

The EGShares Emerging Markets Consumer ETF (NYSEArca: ECON), built around the Dow Jones Emerging Markets Consumer Titans Index, is designed to capture domestic demand across emerging markets, and Mexico represents roughly 20 percent of the fund’s exposure.

ECON is up 6.6 percent year-to-date, and about a third of those gains came in the past month alone. The fund has gathered $416 million in assets in its two-year existence.

While ECON is all about domestic demand, EWW also carries a heavy consumer-based focus with an allocation to segments of the economy that are directly linked to Mexico’s domestic demand story—nearly a third of its portfolio is allocated to consumer staples and some 23.5 percent to telecommunications.

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