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An ETF Bet for Brazil's Olympics

Stocks in this article: EWZ BRF PBR VALE

NEW YORK ( TheStreet) -- Rio de Janeiro's successful bid to host the 2016 Olympic Games underscores the tremendous progress that Brazil has made in recent years, both politically and economically.

Despite a hard hit in 2008, Brazil's equity market has improved dramatically in recent months, in a trend that has been tracked by both iShares Brazil (EWZ) and Market Vectors Brazil Small-Cap ETF (BRF). For the three-month period ending Oct. 1, BRF jumped 38.01%, while EWZ rose 23.14%.

As the country gears up for the Olympic Games, investors should consider adding exposure to this growing marketplace through one of these popular ETFs. (See the Ultimate Guide to Brazil ETFs.)

Emerging market companies are excellent ways to diversify your portfolio, but stock prices can be volatile. Both BRF and EWZ give investors access to a portfolio of Brazilian equities, helping to mitigate the security-specific risk of any specific stock.

While EWZ is the older and larger of the two Brazil-specific equity ETF funds, BRF may be the better bet as Rio de Janeiro prepares for 2016. Despite differences in fees and trading volume, BRF is the better fund for Olympic investing.

Commodities have driven the Brazilian economic boom, and commodity exports make up nearly 10% of output. An improved political climate and efforts to reform the financial system have also strengthened this emerging marketplace. As the country prepares for the Olympics, fundamental weaknesses will be addressed, and improvements in infrastructure and tourism could help to shift some of the pressure of Brazil's economic success off of the country's abundant natural resources.

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