If you believe Latin America is undergoing a secular period of sustained, long-term economic expansion, then the Latin American Discovery Fund (NYSE: LDF) is a fund you need to consider.

Coming out of the last bear market in 2003, these markets enjoyed five straight years of almost uninterrupted gains. During that period, the fund’s worst showing was a +45% jump in 2004. And before the ride ended last summer, shareholders had seen their investment surge over +900%.

Of course, I don’t advocate momentum investing and believe that chasing returns is the surest path to mediocrity. It certainly didn’t work for those who got to the party a little late — many Latin American benchmarks lost more than half their value in 2008.

But there’s no denying this region has some serious firepower when the global growth outlook is intact and markets like Brazil are in favor.

Unfortunately, when the global economy came screeching to a halt, this story lost some its luster. The region relies heavily on commodity exports. And without rabid demand from China, the outlook for Brazilian shipments of soybeans, crude and iron ore suddenly clouded over — as did the earnings forecasts of bellwethers like Companhia Vale Do Rio Doce (NYSE: VALE).

But as I have mentioned recently, a bold stimulus package has China back on the right track. In fact, for the first time since the 1930s, the U.S. is no longer Brazil’s largest trading partner — it has been overtaken by China. Even at half-speed, China still imported approximately $600 million worth of Brazilian sugar, coffee, and other agricultural products in March. That’s about +50% ahead of last year’s pace.

The two countries reported over $3.2 billion in total bilateral trade volume last month, and so far this year Brazil has enjoyed a healthy trade surplus of $6.7 billion. Those numbers make it easy to see why China has pledged to invest heavily in Brazilian infrastructure to avoid distribution bottlenecks and ensure a steady supply of raw materials.

Meanwhile, rebounding commodity prices, bullish comments from emerging market guru Mark Mobius, and upbeat industrial data from China have all helped Brazil’s Bovespa index retake the 50,000 level on heavy trading volume. That marks the highest point for the benchmark since last September.

All of this has been welcome news for LDF. While the fund spans all of South America, the lion’s share of assets (60%) are sunk in Brazil. (Most of the remainder is invested in Mexico, and to a lesser extent Colombia and Chile.) As you might expect, the portfolio is heavily influenced by the oil and gas and mining sectors, but also offers exposure to some of the region’s top banks, telecoms, retailers and infrastructure firms.

Lately the fund’s managers have been gravitating towards established industry leaders that are gaining market share from weaker rivals. They aren’t yet convinced the cyclical downturn in commodities is over, but find the valuations and earnings visibility of financial and consumer-oriented stocks particularly attractive.

Of course, those comments were made in the last annual report on December 31, so management may see things a bit differently today. But this team has been spot on with most of its calls over the long-haul — you don’t outperform 99% of your rivals over the past 3, 5, and 10-year periods by over-weighting the wrong sectors or countries.

Action to Take –> Brazil’s central bank has just slashed interest rates by a full percentage point to the lowest levels on record. The country has done a remarkable job of implementing disciplined fiscal reform and eliminating hyper-inflation (an Achilles heel in years past).

I still think the region will see a few more economic hiccups as it baby-steps towards recovery, any of which could quickly wipe out recent gains. And given how volatile this region can be, I prefer to wait until we’re on firmer footing.

But beyond that, any bet on global economic expansion will point right to commodity-producing nations like Brazil and Chile. I think these developing markets will become more powerful in the years ahead, and LDF has proven itself to be the best way to harness the growth in this region of the world.

To receive in-depth guidance on today’s leading exchange-traded funds (ETFs), plus a proprietary ranking system designed to uncover today’s most profitable funds, please subscribe to Nathan Slaughter’s premium ETF investing newsletter — The ETF Authority .