Global X, the exchange traded fund (ETF) provider behind funds covering Colombia, the Nordic countries and silver miners, is out today with a new one: mid-cap corporations in Brazil.
The Global X Brazil Mid-Cap ETF (NYSEArca: BRAZ) is the first fund to give investors pure exposure to Brazil’s mid-cap companies, defined as those with a market cap between $2 billion and $10 billion. The fund tracks the Solactive Brazil Mid Cap Index and has its largest weightings in utilities (20.8%), consumer staples (17.1%), industrial (16.2%) and financial (14.6%).
Global X CEO Bruno del Ama says his firm is interested in Brazil because it’s a large economy that’s growing rapidly and getting a lot of attention from investors as a result. [Latin America’s ETF Hotspots.]
Del Ama feels that the current options available to investors who want exposure to Brazil may not necessarily be the best ways to get access to the country’s high-quality companies with strong macroeconomic dynamics.
For example, iShares MSCI Brazil (NYSEArca: EWZ) gives exposure to many large companies in Brazil that are not as driven by the local economy, since they’re mainly commodity producers that are exporting their products around the world.
“Medium-sized Brazilian enterprises offer access to on-the-ground, established businesses that reflect the Brazilian growth story,” says del Ama. “They are probably best poised to benefit from the country’s solid macro fundamentals. [BRIC ETFs: A More Potent Group Could Spell Success.]
The other Brazil-focused ETF available is Market Vectors Brazil Small-Cap (NYSEArca: BRF).
Brazil’s economy grew 9% in the first quarter, and for the 14th consecutive week, analysts have raised their forecast for yearly economic growth in the country. As a result, the country’s central bank is expected to raise interest rates accordingly. The country’s growth is forecast to slow next year, however, to 4.5%. [ETFs That Could Benefit As BRICs Get Stronger.]
For more stories about Brazil, visit our category.
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.