After a period of prolonged under-performance and what seemed like extreme pessimism in the country’s equity market, Brazil has staged something of a meteoric rally inside of twenty trading sessions.

The largest Brazil focused equity ETF, EWZ (iShares MSCI Brazil, Expense Ratio 0.60%), which has approximately $4.2 billion in assets under management, has finished up in fifteen out of the past seventeen trading sessions, and the fund has vaulted another 2.7% in the early going today.

In recent days, we have seen some trimming of long positions in the ETF into the recent strength, with more than $250 million leaving the fund via redemptions, and we noted the presence of May 46 put buyers as well yesterday (EWZ is trading with $48 handle today).

Top sector holdings within EWZ are in Financials, Materials, Consumer Staples, and Energy, and top holdings include Itau Unibanco Holding S.A. (7.98%), Ambev S.A. (7.49%), and Petroleo Brasileiro SA Petrobras (5.86%).

With the fund up more than 20% just in the trailing one month period one might be surprised to see net inflows year to date that are still on the negative side (>-$400 million) and in the trailing one year period, EWZ has seen a massive $2.5 billion flow out of the fund.

The bottom line is here, there seems to be a ton of ground to make up for those whom may have been under-allocated to Emerging Markets perhaps in general, and more specifically Brazil, especially if the country has potentially turned the corner.

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