Exchange traded funds that track Brazil’s economy are recovering after a sharp decline thanks to bargain hunting investors. Other factors that are in favor of Brazil focused ETFs include the central bank’s stand against inflationary pressure and strength of the nation’s currency.

“As one of the first emerging markets to take off and slow down, Brazil has not seen an outstanding year of returns since 2009, when EWZ brought in an outstanding 122.43% gain; however, with the reconstruction of developed markets, Brazil has slowed, only returning 0.42% in 2012. Before investors write Brazil off as a bad investment, they should note that this emerging market has a decade of exponential growth behind it,” Carolyn Pairitz wrote for ETF DB. [Bargain Hunting in Emerging Market ETFs]

The largest ETF tracking the Brazilian economy is the famous iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) that has a 13-year history of decent returns to back it up. EWZ is down 15.30% year-to-date, but has snapped up about 3% this week. Eric Dutram for Zacks reports that the recent strength of the real against the U.S. dollar has contributed to this bump, along with the assurance that the central bank is aiming to aggressively fight inflation this year. Recent positive data out of China has also bolstered investor confidence in Brazil’s economy, since the country is Brazil’s largest trading partner.[Brazil ETFs: Worst Performing Q2 International Market]

The Dreyfus Brazilian Real ETF (NYSEArca: BZF) gives investors exposure to movement in the real against the greenback and is usually the most sensitive to ETF to react to economic ups and downs. The Latin America 40 Index Fund (NYSEArca: ILF) has a 50% weight to Brazil, and hedges the exposure to any particular economy since the portfolio also tracks Mexico, Chile and Peru. For exclusively small-cap exposure the Market Vectors Brazil Small-Cap ETF (NYSEArca: BRFtracks companies with a market cap of at least $150 million. The ETF tracks growth within the Brazilian economy well since small-caps tend to do well during economic upswings. [Brazil ETFs Fall as Economy Slows]

There is still the reality that Brazil is growing slower than any emerging market counterpart. The GDP growth for 2013 is anticipated to come in under 3%. The country is tightly correlated to the commodity market due to the abundance of natural resources, so the economic strength is dependent on consumer spending for the time.

Tisha Guerrero 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.