You’ve got to admit, Brazil’s got game these days—literally. In the next five years alone the country gets to play host to two of the biggest sporting events in the world—The World Cup (2014) and the Olympics (2016). It doesn’t get much better than that, does it?
These days there are a lot of reasons to head to Brazil—the country’s been on investors’ radar screens for years and it’s definitely one of the more prominent letters in the whole BRIC equation (second only to China in the MSCI emerging market index). Brazil’s growth story has been broadcast far and wide—a huge population, a rising middle class, and a vast supply of the very commodities that are fueling China’s massive infrastructure boom. All this after years of political and fiscal turmoil.
That’s probably why ETF investors are now hungry for Brazil. According to data from BlackRock, Brazil has ETF and exchange-traded product assets of US$20.4 billion and it saw new asset inflows of $826.4 million in the first three months of this year. And why not—ETFs are a liquid and low cost way to get exposure to a key emerging market.
And these days, liquidity and cost are invaluable in emerging markets, particularly in Brazil where policymakers are struggling to tame an overvalued real. With great long-term fundamentals, Brazil clearly still has some bumps ahead of it—which is why liquidity is key.
For investors bent on flying own to Rio in the short-term, ETFs could just be the right ticket.
