Brazil is categorized as an emerging market and traders and
investors have been eager to gain exposure to the growth in the Brazilian
economy and corporate profits. For residents of Brazil, investing
in local stocks is an option. For overseas investors, this is inherently
more difficult to open an account that facilitates trading in Brazilian
stocks and can deal with currency exchange. Although Brazilian American
Depository Receipts trade on the US exchanges, this is confined to
an investment in one particular stock. The advantages of Brazil exchange
traded funds are that they represent a basket of constituent stocks
or stocks that comprise the Brazilian index. This broadens the scope
of the investment and minimizes the risks associated with any downside
movement in one particular stock.
You can take positions in Brazilian Elf's or buy into an exchange
traded fund that is exposed to the Latin American region. The following
provides a basic summary of options for investing in Brazil or the
Latin American region.
MSCI Brazil shares Index (EWZ)
This exchange traded fund seeks to replicate the price and yield
performance of securities that comprise the MSCI Brazil Index.
Top 10 Constituent Stocks:
Petroleo Brasileiro S.A. Petrobras Preferred Stock: 12.35%
Companhia Vale do Rio Doce Preferred Stock: 11.40%
Petroleo Brasileiro S.A. Petrobras: 10.21%
Companhia Vale do Rio Doce Depository Receipts: 9.45%
Banco Bradesco SA Preferred Stock: 6.97%
Banco Itau Holding Financeira SA Preferred Stock: 4.92%
Companhia de Bebidas das Americas - AmBev Preferre: 4.24%
UNIBANCO - Uniao de Bancos Brasileiros SA: 4.18%
Gerdau SA Preferred Stock: 2.43%
Companhia Siderurgica Nacional: 2.24%
iShares S&P Latin America 40 Index (ILF)
This ETF, whilst not exclusively Brazilian, has exposure to Brazilian
companies and other Latin American companies that comprise the Latin
America 40 Index. This includes organizations from Mexico, Argentina
and Chile. The stocks that comprise this exchange traded fund are
approximately weighted accordingly: basic materials (27.69%), Telecommunications
(17.29%), Financials (16.51%), Oil and Gas (10.18%), Industrials
(8.20%), Consumer Goods (7.33%), Utilities (6.36%), Consumer Services
(6.27%).
Claymore/BNY BRIC (EEB)
This is an emerging market ETF that tracks the performance of a
select list of American Depository Receipt companies comprising
the The Bank of New York BRIC Select ADR Index. This includes companies
from Brazil, Russia, India and China. The industry breakdown of
holdings includes: oil and gas 23.19%, telecommunications 20.87%,
financials 17.66%, basic materials 16.25%, technology 8.99%, consumer
goods 3.45%, consumer services 3.37%, industrials 2.82%, utilities
2.59% and healthcare 0.57%.
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