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Prepping for the World Cup Hasn’t Bolstered Brazil ETFs


Despite Brazil hosting the 2014 World Cup and the 2016 Summer Olympics, Brazilian stock related exchange traded funds have not lived up to the investment hype.

David Garff of Accuvest points out that the promise of a Brazilian revival in anticipation of hosting two global events has fallen short, reports Jeff Macke for Yahoo! Finance.

“The infrastructure investment didn’t happen as fast as everybody thought and they weren’t as profitable as everybody thought,” Garff said in the article. “They aren’t really ready yet.”

For instance, the EGShares Brazil Infrastructure (BRXX) , which focuses on Brazil’s infrastructure sector and began trading on February 24, 2010, has declined 10.6% since inception. [ETF Chart of the Day: Bad News Brazil]

Brazil, Latin America’s largest economy, has been stung on multiple fronts this year. Slack global commodities demand has sent shares of Vale (VALE), the world’s largest iron ore producer, and Petrobras (PBR), Brazil’s state-run oil company, down.

Inflation of 5.84% persists despite a 2.25 percentage point increases to the benchmark Selic rate and economic growth is expected to be just 2.5% this year, a third of what Brazil posted in 2010. [Brazilian Burn: Brazil ETFs Back to Multi-Month Lows]

“It was a bad result that shows the economy is weaker than expected,” Flavio Combat, an economist at Concordia Corretora in Sao Paulo, said in a Bloomberg article. “Perhaps slowing economic activity will not allow for a strong tightening in monetary policy.”

Standard & Poor’s ratings firm has expressed concern over Brazil’s worsening fiscal accounts and may even downgrade the country’s BBB credit rating. Both S&P and Moody’s Investors Services have lowered their outlook on Brazil’s sovereign rating.

Some broad Brazil ETFs include:

  • iShares MSCI Brazil Capped ETF (EWZ) : down 12.6% year-to-date
  • First Trust Brazil AlphaDEX Fund (FBZ) : down 12.6% year-to-date
  • Global X Brazil Mid Cap ETF (BRAZ) : down 10.8% year-to-date
  • Market Vectors Brazil Small-Cap ETF (BRF) : down 26.6% year-to-date
  • iShares MSCI Brazil Small Cap ETF (EWZS) : down 25.1% year-to-date
  • db X-trackers MSCI Brazil Hedged Equity Fund (DBBR) : down 1.8% year-to-date

For more information on Brazil, visit our Brazil category.

Max Chen contributed to this article.