Assets have dribbled out of the largest Brazil Equity based ETF, EWZ (iShares MSCI Brazil Capped, Expense Ratio 0.62%) in the trailing one month period, but we did see some interesting upside call activity during Friday’s session in the marketplace.
With more than $435 million leaving the fund via redemption activity in the trailing one month, making nearly $1 billion out of the fund year to date, we witnessed December 37 call buying in the product, with more than 35,000 contracts changing hands.
With a $33 handle currently, EWZ would need a nearly 11% move higher for these calls to be in the money, but then again these options do not expire for about six months in December.
Notably, EWZ is massively largely than the second largest Brazil Equity based ETF in the marketplace, with its $2.6 billion asset base when compared to BRF (Market Vectors Brazil Small Cap, Expense Ratio 0.60%) which has only $95 million in AUM.
Given the focus on upside calls in EWZ we should also pay attention to leveraged bull fund BRZU (Direxion Daily Brazil Bull 3X, Expense Ratio 0.95%) which has about $50 million in AUM but can catch popularity from time to time among traders looking to trade Brazil from the bull side.
There are several other Brazil equity ETFs in the space even smaller than BRZU, most of them being specialized in nature in terms of focusing on areas such as Small Caps, Infrastructure, or Financials for example.
EWZ itself is rather heavily slanted towards Mega and Large Cap stocks, with more than 37% of the portfolio residing in Mega Caps, and 18% in Large Caps, with the remaining exposure in Mid Cap names.
Top weightings in the portfolio currently look like the following: Itau Unibanco Holding SA (9.57%), Ambev SA (8.69%), Banco Bradesco SA (7.09%), Petroleo Brasileiro SA Petrobras (4.97%), and BRF SA (4.28%).
iShares MSCI Brazil Capped ETF
For more information on Street One ETF market commentary and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com
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