Best ETFs to invest in Brazil

Brazil represents a fast-growing economy among Latin American countries, and it leads the region measured by its Gross Domestic Product. And with the latest figures of its GDP growing 2.56% against the 2.31% expected for this year, there is a lot of optimism about the economy of the country.

brazil funds etf

That is why it is worth investing in the economy to make the best of it. In this article, we will exploit why you to be involved in the Brazil economy and the best way to invest to make the best of it.

Why is it interesting to invest in Brazil?

  • Rebounding Business Benefits: The major commodities sector and the technology services of Brazil experience a significant rebound after their all-time low. This rebound gives a rerun 64.02% and 42% so far this year respectively. Considering this fact, investors now look for opportunities in these sectors to maximize.
brazil etf
  • Relative Cheap Valuation: Comparing the PER of Latam ex Brazil Vs Brazil, we have 11.06 Vs 6.04. If we make the same comparison with the PBV, we have 1.77 Vs 1.50. This means that Brazil is relatively cheaper than the rest of Latin America.

How to invest in Brazil

Generally, investors constantly look for opportunities in different countries, continents and region to maximize the potential of the market and make reasonable profit. And with the current trend of the Brazil economy in 2024, it's worthy of investment in this time.

The best and easiest way to invest in the Brazil stock market is to invest in broad market index. This investment plan can be done using low cost ETFs.

In addition, most Brazilian Stock ETF have two indices. This makes the investment strategy less complex and of course investors can have a better knowledge of how to gain the market potentials.

👉 Check out our article: Best UK brokers to buy ETFs & diversify your portfolio

The main indices following the Brazilian market?

The market capitalization of the Brazilian Stock Exchange is 959.887.723 million dollars, and it has 345 listed companies.

etf brazil

For investment in the Brazil stock market, there are two indices, namely, The FTSE Brazil and the MSCI Brazil indices. The indices tracked by six ETFs with one ETF tracking the FTSE and five ETFs tracking the MSCI Brazil index.

  • MSCI Brazil: It is designed to measure the performance of large and medium-sized companies in the Brazilian market. It has 47 components that cover 85% of the Brazilian stock universe. The MSCI Indexes are a collection of indexes created by MSCI Inc., designed to help investors gauge the performance of global stock markets and to benchmark investment portfolios against global stock market performance.
  • FTSE Brazil: it represents the return of medium and large capitalization companies in Brazil. To limit excessive concentration on a single value, components have a quarterly limit so that no more than 20% of the weighting of the index can be assigned to a single component and the sum of the weightings of all components representing more than 4.5% of the index must not exceed 48% of the total weight of the index.

Top 3 best ETFs to invest in Brazil

The following is a list of ETFs focused on Brazil that have had the best performance in the last 3 years:

  • iShares MSCI Brazil UCITS ETF (DE) USD (Acc)
    • TER: 0.28%
    • 3-year return: 39.92%
    • Ticker: 4BRZ
  • Franklin FTSE Brazil UCITS ETF
    • TER: 0.19%
    • 3-year return: 39.07%
    • Ticker: FLXB
  • Amundi MSCI Brazil UCITS ETF USD ©
    • TER: 0.55%
    • 3-year return: 39.00%
    • Ticker: BRZ

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iShares MSCI Brazil UCITS ETF (DE) USD (Acc)

The ETF replicates the MSCI Brazil index that follows the largest and most liquid companies in the Brazilian market.

It has a full physical replication method. Its base currency is USD and it does not have currency coverage. It is domiciled in Germany and its dividend policy is accumulation. Its annual volatility has been 31.33%

And the following is the sectoral breakdown of the ETF:

brazil short etf

Franklin FTSE Brazil UCITS ETF

The ETF seeks to replicate the FTSE Brazil 30/18 Capped index, which follows large and medium-sized companies with a weighting cap of over 30% for the largest company and 18% for the rest of the companies.

It has a full physical replication method. Its base currency is USD and it does not have currency coverage. It is domiciled in Ireland and its dividend policy is accumulation. Its annual volatility has been 31.31%.

And the following is the sectoral breakdown of the ETF:

brazil etf funds

Amundi MSCI Brazil UCITS ETF USD

The ETF follows the MSCI Brazil index which has in its portfolio the companies with the highest capitalization and liquidity of the Brazilian market.

It has a synthetic replication with non-funded swaps. Its base currency is USD and it does not have currency coverage. It is domiciled in Luxembourg and its dividend policy is accumulation. Its annual volatility has been 31.88%.

And the following is the sectoral breakdown of the ETF:

best brazil etf

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Recommendation of brokers to buy ETFs

Minimum deposit:

£0.00

Minimum deposit:

£50.00

FAQs

Risks of Investing in Brazil

The main risk of Brazil is the country risk, and it is the common denominator in all emerging countries. This means that the rule of law is weak or that there is no reliable political and social stability in the country.
Other risks of investing in Brazil with ETFs is the exchange rate risk which here is complicated because the base currency of the ETFs is USD, but the currency of its origin market is BRL, but the ETF is quoted in EUR. In addition, the Flow of Funds which we can see in the following image. It had a good rebound, but it is starting to fall again.

How do I Invest in Brazil?

It can be done through the ETFs as described in the article, because it is the easiest. Another alternative would be to buy shares of Brazilian companies with the ADRs that are traded in European or US markets.

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