6 ETF Plays for the Brazilian Economy
July 8th, 2010 at 6:00am by Tom Lydon
With well-established global economies and markets fighting to stay steady, emerging markets like Brazil and its related exchange traded funds (ETFs) seem like they are effortlessly expanding in comparison. For now, Brazil looks like an attractive location to stash away one’s wealth.
That’s why, as of today, Global X has launched another Brazil-focused fund: Global X Brazil Consumer (NYSEArca: BRAQ). Brazil has a strong consumer base that’s getting even stronger. The country’s growing middle class is spending more, making consumer activity the fastest-growing segment of the economy.
Food and beverage makes up the largest portion of BRAQ with 34% of the weighting. Retail makes up another 25% and personal/household goods account for 18.9%.
Brazil, the fifth-largest country in the world and Latin America’s largest economy, includes a mixture of agricultural, mining, manufacturing and service sectors, comments Ron Rowland for Money and Markets. The country is rich in natural resources and is also energy independent. As Brazil expands is infrastructure, foreign international companies are becoming more interested in investing in Brazil and the potential the country holds. [Brazilian Banks Lift Emerging Market Financial ETFs.]
For the average investor, there are six ways to play Brazil’s economy:
- iShares MSCI Brazil ETF (NYSEArca: EWZ). EWZ is the largest non-U.S. single-country ETF with $9 billion in assets under management. The fund covers mostly large-cap stocks and includes some of Brazil’s most prominent name brands.
- Global X Brazil Mid Cap ETF (NYSEArca: BRAZ). Recently launched, BRAZ is the first ETF that tracks mid-cap Brazilian companies. Mid-caps are focused on internal consumption, whereas large-caps have more ties with the global economy.
- Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF). Brazil’s small-caps have proved to be steady and substantial performers while the global markets faltered with recent short-term events. BRF has a 30% weighting in the consumer sector and less than 1% in energy. The composition of BRF is a stark contrast to EWZ. [ETF Strategies to Access Emerging Market Debt.]
- EGS INDXX Brazil Infrastructure ETF (NYSEArca: BRXX). BRXX includes 30 stocks that are involved in the development and maintenance of Brazil’s infrastructure.
- ProShares Ultra MSCI Brazil (NYSEArca: UBR). UBR “seeks daily investment results, before fees and expanses, that correspond to 200% of the daily performance of the MSCI Brazil Index.”
- ProShares UltraShort MSCI Brazil (NYSEArca: BZQ). BZQ is a 200% inverse ETF. It should be noted that the fund is best used for short-term moves and tracks the daily movements of the underlying index. [The Age of Emerging Market ETFs? Could Be.]
To find Brazil ETFs using our ETF Analyzer, type “Brazil” into the search box and you’ll see a complete list! From there, you can research any ETF by clicking on the ticker. You’ll find holdings data, composition, a fact sheet and much more.
For more information on Brazil, visit our Brazil category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.