Home News Best Brazilian ETFs for Q4 2022

Best Brazilian ETFs for Q4 2022

by SuperiorInvest

Brazil exchange traded funds (ETFs) provide exposure the largest economy in Latin America and one of the 12 largest economies in the world gross domestic product (GDP). Brazil is developing market economy it is trying to become a modern industrial country with a high standard of living.

The country is rich in natural resources, with more than 40% of the world’s tropical forests and about 20% of fresh water reserves. But it also faces major challenges, including massive economic inequality, government corruption and, more recently, the ravages of the COVID-19 pandemic.

Brazil’s economy is still far from a full recovery, even after shrugging off the worst of the pandemic and rebounding strongly in 2021. Inflation and political upheaval ahead of the October 2022 presidential election have held back growth. However, a strong labor market and a recovering services sector have accelerated growth, with economists now expecting GDP to grow between 2% and 2.5% in 2022.

For investors able to manage risks considerable potential profits can be made in an emerging market economy. The Brazil ETF provides investors with a way to benefit from the potential future growth of the Brazilian economy while limiting some of the risks by diversification across a basket of stocks operating in different economic sectors.

Key things

  • Brazilian stocks have outperformed the US stock market over the past year.
  • The Brazilian exchange-traded funds (ETFs) with the best annual total returns are EWZ, FLBR and EWZS.
  • The highest holding of the first and second funds is Vale SA and the highest holding of the third fund is Eneva SA

There are three Brazilian ETFs traded in the United States, except inverse and leverage effect ETFs, as well as those with less than $50 million managed assets (AUM). Brazilian stocks, as measured by the MSCI Brazil Index, have outperformed the US stock market over the past 12 months, total return by 0.1% compared to S&P 500 total return -2.5% as of August 17, 2022. The best performing Brazil ETF based on past year performance is the iShares MSCI Brazil ETF (EWZ).

We examine three of the best Brazilian ETFs below. All numbers below are as of August 18, 2022. In order to focus on the Funds’ investment strategy, the best holdings listed for each ETF exclude cash holdings and holdings purchased with the proceeds of securities lending, except in unusual cases such as an exceptionally large portion of cash.

  • Performance in one year: 2.9%
  • Cost ratio: 0.57%
  • Annual Dividend Yield: 2.87%
  • Three-month average per day Volume: 24,600,244
  • Assets under management: $5.6 billion
  • Start date: July 10, 2000
  • Issuer: BlackRock Financial Management

EWZ tracks the MSCI Brazil 25/50 index, which provides a broad measure of Brazil’s stock market performance. An ETF provides exposure middle cap and big hat companies based in Brazil. Its largest allocations are in the financial, materials and energy sectors of the Brazilian economy. EWZ follows a mixed strategy and invests in both grow and value shares and is one of the best options for providing broad exposure to the large segment of the Brazilian stock market.

The top three EWZ holdings are Vale SA (VALE3: BSP), metalworking and mining company; preferred shares of Petróleo Brasileiro SA (PETR4:BSP), an integrated oil and gas company; and common shares of Petróleo Brasileiro (PETR3:BSP). Together, these three stocks make up more than 30% of EWZ’s portfolio.

  • Performance in one year: 2.5%
  • Expense ratio: 0.19%
  • Annual dividend yield: 3.45%
  • Three-month average daily volume: 139,667
  • Assets under management: $257.3 million
  • Start date: November 3, 2017
  • Issuer: Franklin Templeton

FLBR tracks the FTSE Brazil Capped Index, which measures the performance of Brazilian mid-cap and large-cap stocks. The ETF provides exposure to mid-cap and large-cap companies primarily based in Brazil. The financial, material and energy sector has the largest representation in the fund. FLBR follows a blended strategy, investing in a mix of growth and value stocks, and is a relatively inexpensive option for investors looking for broad exposure to the Brazilian stock market.

The fund’s three largest holdings are Vale, Petróleo Brasileiro preference shares and Petróleo Brasileiro common shares, all described above.

  • Performance in one year: -10.2%
  • Expense ratio: 0.57%
  • Annual dividend yield: 2.28%
  • Three-month average daily volume: 35,330
  • Assets under management: $95.6 million
  • Start date: September 28, 2010
  • Issuer: BlackRock Financial Management

EWZS focuses on the MSCI Brazil Small Cap Index, composed of small public Brazilian companies across a range of sectors. Small-cap companies may offer better exposure to emerging economies compared to large-cap companies, which tend to be located in a few sectors, such as industrials. The largest part of the EWZS portfolio consists of shares of public services, consumer goods and industrial companies.

The most important holdings of EWZS include Eneva SA (ENEV3:BSP), a company producing and distributing electricity; Sendas Distribuidora SA (ASAI3:BSP), supermarket chain; and Embraer SA (EMBR3:BSP), an airline and aviation services company.

The comments, opinions and analysis expressed herein are for informational purposes only and should not be construed as individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information contained herein to be reliable, we do not guarantee its accuracy or completeness. The opinions and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions and analysis contained in our content are provided as of the date of publication and are subject to change without notice. The material is not intended to be a complete analysis of all material facts relating to any country, region, market, industry, investment or strategy.

Source Link

Related Posts

%d bloggers like this: