ETF Trends
ETF Trends

Emerging market economies, along with related exchange traded funds (ETFs), have shown a swift recovery and growth, for some, is only starting to gain momentum. Brazil is one such country that is beginning to realize its potential and emerging market investors should take note.

The potential returns from investing in Brazil, remarks Louis Basenese for Investment U, are quite attractive when one considers aspects of the country such as a young population, blossoming middle class, stable democratic nation, small reliance on exports and natural resource reserves that could make Brazil self-sufficient. (Why Brazil is among emerging market leaders).

Most importantly, Brazil is a country of spenders. Illan Goldfajn, Chief Economist at Brazilian bank Itaú, claims, “If the world is looking for savers, Brazil is not much good… But if it’s looking for consumers, then we might be able to help.” (The ultimate BRICs guide).

Also:

  • Brazil’s economy is expected to expand this quarter at an annualized rate of 9%, with unemployment falling and income on the rise.
  • The booming economy has given rise to a burgeoning middle-class – over the last four years, Brazil’s middle-class has grown by 24% – and the country is becoming one of the premier consumers of luxury goods.
  • Additionally, consumer credit use has risen around 30% per year for the last three years. (Brazil’s economy is just getting started).

Basenese suggests that investors should take advantage of this rising economy through small-caps because the majority of companies in Brazil are smaller companies that cater toward a growing domestic consumer base.

For more information on Brazil, visit our Brazil category.

  • Shares MSCI Brazil Index (NYSEArca: EWZ): up 118.8% year-to-date

  • Market Vectors Brazil Small Cap (NYSEArca: BRF): up 27.0% in the last three months

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.