Brazil ETF

By: EconomyWatch   Date: 3 August 2009

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EconomyWatch

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Brazil is considered as one of the world’s most vibrant economies. It is part of the BRIC (Brazil, Russia, India and China) countries, considered as the most promising emerging economies. Brazil ETFs are those exchange-traded funds that invest in the country’s stocks either through local stock exchanges or via American and global depositary receipts on the US and European stock exchanges. Brazil ETFs track only the country index or a widely followed third party index. Thus, these ETFs are passively managed.

 

Brazil ETFs are concentrated in certain sectors rather than being a diversified fund like an S&P 500 fund. As Brazil’s financial markets are thrown open up to more foreign investment, investors should have more Brazil ETF choices to choose from.

 

Brazil ETF: Reasons to Invest

The following factors make Brazil ETFs good investment options:

·        Seasons: The Brazilian Bovespa stock index is seasonal and peaks between October end and May end. The index gains about 16.4% on an average per period.

·        Trends: As of March 2009, the Brazilian Bovespa stock index was witnessing an upward trend, with the index above its 50-day moving average.

·        Fundamentals: As of April end 2009, Brazil was the leading producer of coal, copper, iron ore, crude oil, gold and silver. The demand for these commodities was on the rise.

·        Performance: The Moving Average Convergence Divergence (MACD) was on an uptrend in April 2009. Moreover, the Brazilian index showed higher gains than the S&P 500 index.

·        Initiatives: The country’s government had initiated a growth acceleration program, which includes a $231 billion investment in social and energy projects and transport infrastructure. This program would continue until 2010.

 

Brazil ETF: Popular Ones

Some of the popular Brazil ETFs are:

  • iSharesMSCI Brazil iShares: Trading under the ticker symbol EWZ, this ETF tracks the Brazilian market and seeks to provide returns equivalent tothat of the securities traded in the market. While this ETF was down 56.6% in 2008, it exhibited a sharp recovery of 55.6% from the beginning of 2009 to July 20, 2009.

  • WisdomTree Dreyfus Brazilian Real Fund:Trading under the ticker symbol BZF, this ETFseeks to earn income that reflects money market rates in Brazil and provides exposure to the movement of the Brazilian Real relative to the US dollar. This ETF had appreciated by 17.9% from the start of 2009 to July 20, 2009.

 


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Most Popular in Exchange Traded Funds

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