BRF: New Brazil Small-Cap ETF
ETF developers are slicing the pie thinner and thinner, and this time thinner might be better. Those wishing to invest in Brazil have had the very popular iShares MSCI Brazil (EWZ) available for almost nine years. EWZ is focused on the largest, most liquid Brazlian stocks. Now Van Eck Global is launching Market Vectors Brazil Small-Cap ETF, under the ticker BRF. Shares began trading today.
As one of the top emerging market countries – and a dominant economic force in Latin America – Brazil is included in many international portfolios. Van Eck is arguing that Brazil’s huge growth potential can best be captured by investing in small-cap stocks. The index tracked by BRF attempts to avoid the tilt toward energy and materials stocks of other Brazil benchmarks, and it has a bigger weighting in consumer discretionary, financials, and utilities. This suggests that BRF may be more dependent on Brazil’s internal economic growth and less influenced by movement in commodity prices. With Brazil being the fifth-most populous nation, an ETF that attempts to capture internal growth might be just the ticket. Van Eck refers to it as playing the home field.
BRF is rather pricey with a gross expense ratio of 1.09%, though the sponsor has agreed to cap it at 0.73% until May 2010. We are pleased to see Van Eck continuing to launch new and innovative ETF products. As usual, Van Eck does an excellent job of providing additional information on their website, such as fund overview, fact sheet, index statistics, and more.
Disclosure: no positions