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The Brazilian Real currency, shown here in Brasilia on July 11, 2001.

Of the four BRIC countries -- Brazil, Russia, India and China -- investors have taking a liking to Brazil and China the most.

Oil company Petrobas and Compania Vale do Rio Doce , the world's largest iron ore producer, are must-have Brazilian stocks, almost as popular in portfolios as U.S. blue chips General Electric and Exxon Mobil are. The Brazil trading vehicle iShares MSCI Brazil Index Fund is heavily weighted in those two stocks.

Whereas iShares MSCI Brazil Index Fund captures the natural-resources and export parts of the Brazilian economy, Van Eck's Market Vectors Brazil Small Cap ETF ties its hitch to the emerging middle class in the fifth-largest country in the world.

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The Market Vectors Small Cap Fund's makeup is different than the iShares MSCI Brazil Index Fund. The iShares MSCI Brazil Index Fund is heaviest in materials, at 26%, energy, 24%, and financials, 19%. The Market Vectors Small Cap Fund is heaviest by far in consumer discretionary, at 31%, followed by materials and financials, at 15% and 11%, respectively. The Market Vectors Small Cap Fund has 10% in industrials, compared with 2% for iShares MSCI Brazil Index Fund.

The Market Vectors Small Cap Fund makes smaller single-stock bets. In the iShares MSCI Brazil Index Fund, Petrobras and its preferred stock combine to make up 23% of assets, and Vale and its preferred account for 16%. A big problem for either company would create a tremendous drag. Contrast that to the Market Vectors Small Cap Fund's largest holding, Ultrapar Participacoes, a gas station and chemical company, at 6.6%.

All of the stocks in the fund must either be domiciled in Brazil or generate at least 50% of their revenue from the country. The minimum market cap is $150 million, and the companies range from $250 million to $3.8 billion. There are 52 constituents in the index with an indicated dividend yield of 3.92%.

Brazil's strength in selling natural resources is making the country wealthier, improving the quality of life and creating more disposable income to benefit the consumer industry. In that way, the iShares MSCI Brazil Index Fund and the Market Vectors Small Cap Fund are birds of a feather.

The fund's brochure contains no back-test information, so the best chance to get a feel for what the fund might do could be to look at a chart of some of the larger holdings compared to the benchmark Bovespa Index. At times, these stocks diverge noticeably from the Bovespa (a good thing) and at other times they look a lot like that index. This looms as a problem. If it turns out that the small-cap fund behaves like the large-cap index, there may not be a good reason for U.S.-based investors to buy.

For now, the Market Vectors Small Cap Fund needs time to differentiate itself from the large-cap part of the Brazilian market.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of "Random Roger's Big Picture Blog."

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