The iShares MSCI Brazil Index (EWZ) finished 2009 up roughly 121% providing a hefty return for its investors. It is easy to understand why the fund has performed so well when you look at a few of its underlying holdings and their individual performance.
Disclosure: Long EWZ
Holding / % of Fund / 2009 % Return
Petrobras / 23.00% / 111.00%
Vale / 16.60% / 57.60%
Itau Unibanco Banco Holding / 8.12% / 71.73%
Banco Bradesco / 4.63% / 131.00%
Companhia de Bebidas das Americas / 3.07% / 140.00%
Companhia Siderurgica Nacional / 2.77% / 165.00%
Gerdau SA / 2.28% / 170.00%
These holdings account for roughly 60% of the total ETF. The EWZ’s top sector weightings consist of Materials, Energy, and Financials, all of which are sectors that we believe will continue to expand in 2010. In our view, the iShares MSCI Brazil Index (EWZ) will continue to see gains well into the first half of 2010. Historically, the EWZ has proven to perform well in periods of expansion. The exhibit below shows the annual returns for the EWZ coming off the last economic recession.
Vale / 16.60% / 57.60%
Itau Unibanco Banco Holding / 8.12% / 71.73%
Banco Bradesco / 4.63% / 131.00%
Companhia de Bebidas das Americas / 3.07% / 140.00%
Companhia Siderurgica Nacional / 2.77% / 165.00%
Gerdau SA / 2.28% / 170.00%
These holdings account for roughly 60% of the total ETF. The EWZ’s top sector weightings consist of Materials, Energy, and Financials, all of which are sectors that we believe will continue to expand in 2010. In our view, the iShares MSCI Brazil Index (EWZ) will continue to see gains well into the first half of 2010. Historically, the EWZ has proven to perform well in periods of expansion. The exhibit below shows the annual returns for the EWZ coming off the last economic recession.
Year Return
2003 104.30%
2004 33.73%
2005 50.04%
2006 40.40%
2007 74.54%
2003 104.30%
2004 33.73%
2005 50.04%
2006 40.40%
2007 74.54%
Even after a stellar 2009, the EWZ is still roughly 25.74% below its all time high, and roughly 7.8% below its closing price on January 2, 2008. We believe that the EWZ is poised to have another solid year of performance in 2010. With a full global economic recovery underway, Brazil is in position to capture future growth as it is not faced with all the economic headwinds as we are faced with domestically.
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Disclosure: Long EWZ