5 Reasons to Like Brazil, And 5 ETFs to Play It

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 |  Includes: BRAQ, BRF, EWZ, GML, UBR
by: Tom Lydon

Uncertainty in the U.S. markets and poor economic readings have pushed investors to other top-performing exchange traded funds, such as those that give exposure to Brazil.

If you’ve been on the fence about this economy, read on.

  • The Latin American country is rich in natural resources and a global leader in agriculture, comments Kevin Grewal for Minyanville. As the world population continues to grow, demand for scarce resources will increase, and Brazil is in a good position to capitalize on the demand.
  • In addition, the country has a strong financial sector, with public debt at around 40% of GDP and average capital adequacy ratio of its banks at 18%. Interest rates remain low, which will help businesses borrow and expand.
  • Brazil is also energy self sufficient. The South American country has developed its own oil reserves through domestic production and has developed renewables.
  • The Brazilian middle class has driven the country’s domestic consumption. Credit Suisse calculated that almost 22 million have entered Brazil’s middle class in the last five years and the number is expected to grow.
  • Brazil’s unemployment rate diminished by 0.2% to 6.7% in August, a record low, reports Matthew Bristow and Andre Soliani for Bloomberg.

Numbers like these have led to an uptick in foreign investment in Brazil, says The Wall Street Journal. The interest has helped offset the impact of market volatility on Brazil’s economy.

  • iShares Brazil MSCI Brazil (NYSEARCA:EWZ)
  • Market Vectors Brazil Small-Cap ETF (NYSEARCA:BRF)
  • SPDR S&P Emerging Latin America ETF (NYSEARCA:GML)
  • Global X Brazil Consumer (NYSEARCA:BRAQ)

If long-only isn’t enough and you want to add more oomph to your Brazil exposure, consider ProShares Ultra MSCI Brazil (NYSEARCA:UBR), as well.

Disclosure: None

Max Chen contributed to this article.