Broadly speaking, it has been a good year for financial services ETFs. Year-to-date, the Financial Select SPDR (NYSEArca: XLF), the largest sector ETF by assets, is higher by 23.5%.

Over the past 90 days, U.S> bank stocks have slowed a bit. XLF is up 2.2% over that time while the iShares Financials ETF (NYSEArca: IYF) is higher by 3%. Decent performances, but U.S. bank ETFs have recently left something to be desired compared to the Global X Brazil Financials ETF (NYSEArca: BRAF).

The biggest criticism that can be levied against BRAF is size. BRAF is over three years old and has just $2.4 million in assets under management. BRAF’s slight size has not stood in the way of the fund surging nearly 16% over the past three months, indicating the ETF is participating in the “Brazilian bounce” that has recently materialized. [BRIC ETF Breakout]

BRAF’s run may not be over. The Brazilian government has lifted foreign ownership limits on state-run Banco do Brasil to 30% from 20%, reports Samantha Pearson for the Financial Times. Banco de Brasil requested the change in a bid to gain a larger weighting in Brazil’s benchmark Bovespa, a move that could lead institutional investors to boost their interest in the bank.

Banco do Brasil is BRAF’s fifth-largest holding at 5.85% of the ETF’s weight. Three of Brazil’s largest banks – Banco Santander Brasil (NYSE: BSBR), Itau Unibanco (NYSE: ITUB) and Banco Bradesco (NYSE: BBD) – combine for nearly 30% of BRAF’s weight. BRAF also has a trailing 12-month yield of 4.22%, more than triple the 1.63% found on XLF. [Bank on Brazilian Banks With This ETF]

As the FT notes, sell-side analysts have recently become increasingly bullish on Brazilian banks.