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Investors Sidestep Brazil in Latin American ETFs


BRIC nation Brazil is being avoided by ETF investors in Latin American funds as they favor better-performing countries such as Mexico with stronger economic growth.

For example, iShares MSCI Mexico (EWW) is up 22.5% the past year while iShares MSCI Brazil (EWZ) has lost 14.5%, according to Morningstar.

The Mexican economy is forecast to grow 4% in 2013, more than Brazil. [Mexico ETF Boosted by Expanding Economy]

“As Brazil remains a laggard in Latin America, more U.S. investors are pulling money from funds that track the emerging-market giant,” reports Murray Coleman at WSJ.com. “But portfolio managers aren’t convinced that such a shift is short-term performance chasing. Rather, they see longer-term political and economic problems facing Brazil.” [Brazil Rebounding After Tough 2012]

The $9 billion iShares MSCI Brazil, the most popular of its kind tracking Latin America, saw outflows of $269.4 million in the three months through January, according to the article. In contrast, the iShares MSCI Mexico (EWW) attracted $596 million in net inflows.

“Brazil has some strong cross currents that are developing into real head winds for investors,” said Paul Christopher, a strategist at Wells Fargo, in the report.

The country is set to host the World Cup in 2014 and the Summer Olympics in 2016.

iShares MSCI Brazil


The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.