There are more than exchange traded funds trading in the U.S. focusing on or offering heavy exposure to Brazilian stocks and some of those can be considered niche funds. The Tierra XP Latin America Real Estate ETF (NYSEArca: LARE) is one of those ETFs.
LARE, which debuted in December, follows the Solactive Latin America Real Estate Index. That benchmark also features exposure to real estate opportunities in Mexico. Brazil and Mexico are Latin America’s two largest economies.
Related: Corruption Probe Plagues Brazil ETF
[related_stories]“LARE “holds Mexican and Brazilian REITs, as well as major real estate equities in Mexico, Brazil, and Chile. REITs and REOCs represent approximately 54 percent and approximately 46 percent, respectively, of the fund’s 52 components,” according to a statement issued by Tierra Funds.
“The Solactive Latin America Real Estate Index screens for all listed equities with primary listings in the Latin America region and which derive substantially most of their income from real estate and real estate services. The Index then uses dividend yield, market capitalization and liquidity in the underlying shares to determine weights. The Index is rebalanced quarterly,” according to Tierra Funds.
Earlier this year, Brazilian rally went into high gear after former President Luiz Inacio Lula da Silva was detained, adding to speculation that support will grow to impeach his successor, President Dilma Rousseff. Rousseff has since been removed from office, but the Brazilian economy faces myriad challenges.
Traders have raised Brazilian bets this year on speculation that a new administration could enact a number of austerity measures and reforms to stabilize the economy.
“The real-estate market in Brazil has been under pressure due to the recession there, says Jamie Anderson, managing principal of Tierra Funds. Still, he is optimistic, despite the country’s economic travails and the political turmoil surrounding the impeachment of President Dilma Rousseff. Mr. Anderson figures that the economy could turn a corner this year, particularly if the political situation stabilizes, and that there could well be a cut in interest rates, which would benefit the property market,” reports Gerrard Cowan for the Wall Street Journal.
Related: Brazil ETFs Roar Back as Government Incompetence Ends
For more information on the Brazil ETF market, visit our Brazil category.