The largest ETF that invests in Brazil has gathered nearly $900 million in fresh assets in September after the country announced a stimulus package designed to jumpstart the sluggish economy. Also, some highly-respected investors and hedge fund managers say Brazil is their favorite choice in emerging markets.
Last month, Brazil announced a $66 billion stimulus to improve infrastructure and stoke investment. [Brazil ETFs Strengthen on Stimulus Measures]
The economy has slowed, which is reflected in the poor performance of iShares MSCI Brazil (NYSEArca: EWZ), which is down about 3% year to date and holds $10.2 billion in assets.
Still, some high-profile investors such as George Soros and Ray Dalio are bullish on the long-term outlook for Brazil.
Dalio, head of hedge fund firm Bridgewater Associates, added over $100 million to the Brazil ETF in the second quarter, his largest purchase, according to The Motley Fool.
“Like so many other countries around the world, Brazil is experiencing declining economic growth. But when investors like Dalio are going in, others should follow,” Jonathan Yates wrote in the article.
In a recent speech to a gathering of bankers in San Paulo, former president Bill Clinton said, “If I were just sitting in a room betting on the future of rising countries, I’d bet on Brazil first,” according to the report. [ETF Chart of the Day: Brazil]
Small-caps on fire
One bullish signal is that Brazil small-cap ETFs are outperforming in 2012. For example, Market Vectors Brazil Small-Cap (NYSEArca: BRF) and iShares MSCI Brazil Small Cap (NYSEArca: EWZS) are up 11.6% and 19.3%, respectively, year to date.