As of July 10, EWZ was up 42.13% on the year, and the fund imposes a reasonable 0.63% fee. The top three market sectors represented in EWZ's portfolio are materials, energy and financials, with 27.11%, 26.94% and 18.91% allocations, respectively. Interested investors should keep in mind that this fund is top heavy and focuses on the largest companies in Brazil.
Market Vectors Brazil Small-Cap ETF (BRF)
While many of the companies that dominate EWZ's portfolio are based in Brazil, the fund's holdings depend, in large part, on exports and the global economy outside of Brazil. Van Eck introduced the BRF on May 12, 2009, to offer investors access to smaller companies in Brazil that should benefit from an increasing consumer base and a growing middle class. The smaller companies that make up BRF must derive at least half their revenues from selling products to Brazilians.
While BRF may be a "purer" play on Brazil's economy over time, investors must be conscious of the volatility that comes with a portfolio of small-cap firms. The top three sectors represented in the portfolio are consumer discretionary, materials and financials, with 30.9%, 16.5% and 11.3% allocations, respectively. While BRF is a new fund, it has already attracted a three-month average daily trading volume of 101,850. BRF has a 0.73% expense ratio.
WisdomTree Dreyfus Brazilian Real Fund (BZF)
BZF offers investors currency exposure to Brazil, employing a structure that is very different from EWZ and BRF. Instead of holding a portfolio of stocks of Brazilian companies, BZF seeks to achieve returns that reflect money market rates in Brazil available to foreign investors and changes in value of the Brazilian real relative to the dollar. The currency instruments that make up this fund are very short-term, but investors should be mindful that BZF is not a money market fund, and therefore will not have a constant share price.
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