Markets

Financials ETF Joins Global X Brazil Lineup

Global X, the fund manager known for its emerging market funds, added to its lineup of Brazil sector-specific ETFs today with the launch of the first fund to provide such targeted exposure to the financial firms in South America's biggest economy.

The Global X Brazil Financials ETF (NYSEArca:BRAF) is the third in a six-ETF lineup Global X has been unveiling this year. The fund, which comes with an annual expense ratio of 0.77 percent, joins Global X's Brazil Consumer ETF (NYSEArca:BRAQ) and the Global X Brazil Mid-Cap ETF (NYSEArca:BRAZ). Both were launched earlier this summer.

Brazil continues to be seen as a prospective investment destination, partly due to fiscal and monetary policies, partly due to expectations that upcoming global events the country is hosting-namely the World Cup in 2014 and the Olympic Games in 2016-should be catalysts for additional investment growth.

"We saw solid trends of decreasing fiscal debt, decreasing unemployment, nice growth profile in bank credit, M&A deals, and industrial production [in Brazil]," Evelyn Hu, a Global X executive focused on the firm's institutional clients, told IndexUniverse.com.

"Part of that strong growth has come from the restructuring of the bank system over the past decade, the results of which are compelling, as Brazilian loan portfolio values are now at least fivefold higher than in any other country in Latin America," she added.

Targeted Focus

Up to now, investors looking at Brazil as a prospective investment destination could only access that economy through broader-in-scope funds. Among them, the mammoth large-cap iShares MSCI Brazil Index Fund (NYSEArca:EWZ), which has some $9.5 billion in assets, and Van Eck's $600 million Market Vectors Brazil Small-Cap ETF (NYSEArca:BRF).

But the landscape for Brazil-focused ETFs is rapidly changing, and BRAF joins a growing roster of funds targeting that economy. Almost half of the new ETF's portfolio is allocated to bank names and a third to real estate companies. Insurance and financial services firms complete the mix.

The fund will track the Solactive Brazil Financials Index, which comprises 25 securities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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