The real surprise may just be the Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF). BRF, which has $228 million in assets under management, allocates 38.1% of its weight to discretionary names, more than twice the weight given to industrials, the ETF’s second-largest sector weight.
Bolstering the case for Citi’s tepid view of Brazilian consumer stocks is inflation of 5.84%, well above the government’s target range, and that is despite a 2.25 percentage point increases to the benchmark Selic rate and economic growth is expected to be just 2.5% this year, a third of what Brazil posted in 2010. [World Cup Prep Hasn’t Bolstered Brazil ETFs]
Additionally, Brazilian stocks are not significantly discounted relative to the broader emerging markets universe and actually somewhat pricey compared to their own history. As of mid-October, Brazilian stocks had a forward P/E ratio of 10.6 compared with a 10-year average of nine.
Market Vectors Brazil Small-Cap ETF
