ETF Offers a Taste of Investing in Brazil

If you're not familiar with Brazil, you might be doing your portfolio a disservice. Here is a look at how a Brazil-focused exchange-traded fund (ETF ) could give you a broad taste of the sizzling returns in this hot "BRIC" market.

Grabbing a BRIC

Right now, Brazil is one of the four top emerging-market economies on every analyst's growth radar. Companies in Brazil as well as in Russia, India and China (or BRIC) are expected to grow at a phenomenal rate for the next several decades (see "'BRIC ETF Investing: An Introduction").

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. EWZ has returned around 45% since January, a statistic that's pretty telling of the growth Brazil has been experiencing of late.

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