Is Brazil ETF A Smart Investment? | ETF Trends

Most exchange traded fund (ETF) investors hold emerging market exposure, and Brazil may be the least risky, emerging market investment destinations out there. Here’s why.

Brazil’s economy grew 7.5% year-over-year ending September 31, and GDP expanded 8.4% year-to-date, writes Martin D. Weiss for Money and Markets. Conservative estimates puts growth over 7% for 2011.

Additionally, Brazil’s budget deficit is 3% of GDP, foreign debt is almost zero and government debt will likely drop to about 30% of GDP in a few years.

As the Brazilian economy continues to grow, along with inflation rates, market observers now expect higher borrowing costs come January, report Matthew Bristow and Iuri Dantas for BusinessWeek. [New President Has Brazil ETFs Sitting Pretty.]

Third quarter GDP increased 0.5% from the previous quarter and 6.7% year-over-year. Economists project that the economy will grow by 7.6% for 2010 and slow to 4.5% next year. Consumer prices jumped 5.63% in November year-over-year. The Central Bank has a target of 4.5%, plus or minus 2%. Central Bank rates currently sit at 10.75%.

Brazil has set up partnerships with South Africa and India through the IBSA dialogue forum, set foot in Africa and the Middle East and formed strategic partnerships with China and the E.U., according to Nima Khorrami Assi for Guardian. The Brazilian government is seeking to expand its own economic interests at the global level by offering raw material and commodities exports to its partners. [The World Cup Stimulates Host Country ETFs.]

For more information on Brazil, visit our Brazil category.

  • iShares MSCI Brazil Index Fund (NYSEArca: EWZ)
  • Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF)
  • iShares MSCI Brazil Small Cap Index Fund (NYSEArca: EWZS)

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.