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.
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in Mutual Funds
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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