ETF Trends
ETF Trends

Brazil’s recent rise among the industrializing nations has brought about rapid growth which has given way to a new social consciousness, as well as an exchange traded fund (ETF) that has a bright future.

In Brazil, the middle class is described as someone with a job in the formal economy, access to credit and who has ownership of a car or motorbike, so says The Economist.

One research institute says that this includes households with a monthly income ranging from about $600-$2,600. Since 2002, the proportion of the population that fits this description has increased from 44% to 52%. Brazil, previously notorious for its extremes, is now a middle-class country.

The new middle-class are people who would normally serve other people, so Brazilians are very aware of class, and none of them want to feel “cheap,” nor do they settle for anything less than cosmetically “perfect.” This could explain the national obsession with plastic surgery, with around 600,000 operations annually – second only to the United States.

The high interest rates of today’s Brazil is helping to calm the rapid growth in credit (in the year to July, it had grown 20%), and lending may be scaled back.

Many analysts feel that this newer middle class will still favor Luiz Inácio Lula da Silva’s Worker’s Party rather than the center-left of former president Fernando Henrique Cardoso. The worker’s party will have to pay attention to this group of voters that have socially conservative attitudes toward issues such as abortion and gay marriage.

  • iShares MSCI Brazil Index (EWZ): down 20.9% year-to-date
  • Claymore/BNY BRIC (EEB): down 28.6% year-to-date; Brazil is 57.8%
  • streetTRACKS SPDR S&P BRIC 40 (BIK): down 29.9% year-to-date; Brazil is 27.3%
  • iShares MSCI BRIC Index (BKF): down 35.3% year-to-date; Brazil is 34.6%

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.