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ETF's Brazil

Page history last edited by Brian D Butler 15 years, 2 months ago


 

 

 

What are ETF's?

 

see our discussion on ETF exchange traded funds

 

 

     note:  this is a sub-topic of "asset management"

 

 

ETF's Brazil

 

 

EWZ

GML

ILF

 

12/2008:  iShares MSCI Brazil (EWZ) as a commodities play:   The iShares MSCI Brazil Index Fund (EWZ) is currently down 52.6% year-to-date. The financial sector is the fund’s third-largest weighting at 19.6%. It’s behind energy (30.2%) and industrial materials (27.2%)

 

 

Index's in Brazil:

 

INDEX VALUE CHANGE %CHANGE TIME
BRAZIL BOVESPA STOCK IDX 41,582.94 -407.61 -0.97% 01/09
BRAZIL IBX INDEX 13,743.32 -99.06 -0.72% 01/09
BRAZIL ELECTRIC.ENRGY IX 15,422.06 78.69 0.51% 01/09
BRAZIL TELECOM INDEX 1,008.99 -17.12 -1.67% 01/09
BRAZIL CORP GOV INDEX 4,003.81 -19.19 -0.48% 01/09
BRAZIL VAL/BOV 2 TIER IX 3,608.53 -42.83 -1.17% 01/09
BRAZIL IBX-50 INDEX 6,133.91 -48.10 -0.78% 01/09

 

source:  http://www.bloomberg.com/markets/stocks/wei_region1.html

 

 

 

BRIC - ETF's

 

Three BRIC ETFs he examines are:

 

  • SPDR S&P BRIC 40 Index (BIK): down 58.5% year-to-date;0.5% expense ratio

 

BRIC ETFs

 

 

  • iShares MSCI BRIC Index (BKF): down 61.2% year-to-date;0.75% expense ratio

 

BRIC ETFs

 

 

  • Claymore Bank of New York BRIC (EEB): down 57.1% year-to-date;0.7% expense ratio

 

BRIC ETFs

 

 

 

 

 

Older news: 

 

If you're interested in investing in Brazil (or almost any emerging market), an ETF can provide you market exposure with the same security and ease of access as buying and selling a domestic stock. For example, Barclays' (BCS) country-specific iShares MSCI Brazil Index Fund (EWZ) can take a whole lot of red tape out of investing in Brazil's heavily regulated market.

 

How does EWZ work? The ETF mirrors the MSCI Brazil Index, an index that was designed to measure Brazil's domestic market equity performance. What that means is that EWZ essentially tracks the performance of the hundreds of Brazilian companies that trade on the São Paulo Stock Exchange.  

 

The ETF is heavily weighted in Brazil's key economic areas -- materials (29.6%, including Companhia Vale do Rio Doce) and energy (22.6%, including Petrobas) -- as well as quickly emerging service areas, such as financials (16%, including Banco Bradesco (BBD).

 

If you're interested in getting some exposure to Brazil without investing in an ETF that's completely Brazil-centric, alternative investments exist as well. There are Latin American ETFs that have holdings throughout Latin America (including Brazil).

 

For example, the S&P Latin America Index has inspired two ETFs: State Street's SPDR S&P Emerging Latin America (GML) and Barclays' iShares S&P Latin America 40 Index (ILF). And with BRIC ETFs, such as the Claymore/BNY BRIC (EEB) and State Street's SPDR S&P BRIC 40 (BIK), the possibilities to diversify your exposure to Brazil with the other BRIC countries are greater than ever before.

 

 

Alternatively, there are also a number of closed-end mutual funds that feature Brazil. Among these are Morgan Stanley's Latin America Discovery Fund (LDF) and Credit Suisse's Latin America Equity Fund (LAQ).

 

 

Get news & Quotes from Brazil & Lat. AM funds

 

 

 

 

 

 

Why Brazil?

 

While the BRIC country closest to the U.S. may be known best for its beaches and rainforests, one of Brazil's most attractive draws may be its economy. Brazil has the most powerful economy in Latin America. The country manufactures everything from sophisticated turbine aircraft to orange juice, and it has a well-established professional services sector.

 

Financial services especially have been getting a boost recently at the demands of Brazilian enterprise. Companies such as Banco Itau (ITU - Cramer's Take - Stockpickr) have been seeing these demands translate into real growth; the private Brazilian bank's NYSE- listed ADR has jumped over 40% since March

 

A notable amount of this growth in Brazil's financial sector can be attributed to Brazilian consumers. These days, Brazilians often buy on credit and are able to enjoy a lifestyle once relegated to those in the "industrialized" countries.

 

However, if you're not be ready to pick up an English-Portuguese dictionary and send your portfolio on a trip to São Paulo, that's perfectly fine because there are other factors worth considering when it comes to investing in the Brazilian economy.

 

Understand the Region

 

Brazil's new economic boom doesn't come risk-free. In 2001, investors were shown the ugly side of Latin American economies when Argentina's market collapsed, sending reverberations throughout the region. And while Brazil's economy is certainly showing none of the signs Argentina's did six years ago, it's worth noting that even the fastest rising emerging markets can stumble on their way up.

 

While Brazil may not be growing as quickly as some of the other BRIC countries (Brazil's economic growth rate is less than that of India and China), it does have a marked advantage: Infrastructure. Of the four BRIC countries, Brazil arguably has the most developed economy. This also means that Brazil is able to be more autonomous in the way it operates, from an economic standpoint.

 

There are also some barriers to trade in Brazil, namely high taxes and complex regulatory compliance laws. But while these are problems faced by those interested in direct investment in Brazil, if you're an investor interested in a Brazilian ETF, taxes and regulations are more indirect concerns.

 

Ultimately, many feel that Brazil's prospects outweigh its risks. The fact that Brazilian companies are thriving says enough to scores of investors on its own (Brazilian energy conglomerate Petrobas is up almost 40% this year alone).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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