This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Benchmark Brazil ETF Gets Mid-Cap Rival

NEW YORK ( TheStreet) -- The S&P 500 Index of the largest U.S. companies fell 24% in the decade that ended in December 2009, excluding dividends, while Brazil's Bovespa Index quadrupled.

Brazil benefited from emerging-market countries that needed resources to build up their infrastructure. That trend is likely to continue, and Brazil will be in the spotlight after having earned the right to host the 2014 World Cup and the 2016 Summer Olympics.

The exchange traded fund industry has seized on the Latin investment hotspot. The latest ETF is the GlobalX Brazil Mid Cap ETF (BRAZ), which GlobalX says enables U.S.-based investors to capture the "story on the ground" in Brazil better than the iShares MSCI Brazil Index Fund (EWZ). The iShares MSCI Brazil Index Fund targets the largest resource companies, which have been the catalyst for the Brazil theme.

The new mid-cap fund's largest sector weighting is utilities, at 20% of assets, followed by consumer staples, with 17%, and industrials, at 16%. The ETF has 40 holdings, with the biggest targeted at 5% of the fund, which lowers single-stock risk. In comparison, the iShares Brazil fund has a combined 18% allocated to Petrobras' (PBR - Get Report) common and preferred stock.

The Brazil Mid Cap ETF is actually the second exchange traded fund to target the "story on the ground." A little over a year ago, Van Eck launched the Market Vectors Brazil Small Cap ETF (BRF). Though the ETF targets the same theme, it's very different. The small-cap fund is heaviest in financials, at 27% of assets, and consumer discretionary, at 25%. The fund has been very successful in attracting over $600 million in assets.

At the industry level, there is enough differentiation for both mid-cap and small-cap ETFs to succeed, but the mid-cap fund might better capture the middle-class ascendancy, which is one of the drivers for the "story on the ground." The reason is the sector makeup. The financial industry improves the everyday life of Brazilians less than others do. In addition, it stands to reason that, before buying expensive wristwatches and clothing from consumer-discretionary companies, newly middle-class Brazilians might instead improve the quality of their diets and modernize their utilities.

Investors who agree with that line of thinking would probably go with the mid-cap fund. Those who place greater importance on aspirational-discretionary purchases may prefer the small-cap ETF.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BRF $11.15 0.00%
BRAZ $6.42 0.00%
BRXX $6.05 0.00%
EWZ $23.02 0.00%
PBR $4.64 0.00%


Chart of I:DJI
DOW 16,472.37 +200.36 1.23%
S&P 500 1,951.36 +27.54 1.43%
NASDAQ 4,707.7750 +80.6910 1.74%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs