## [# Brazil ETFs Crumble Under Latest Scandal](/sections/news/brazil-etfs-crumble-under-latest-scandal)
# Brazil ETFs Crumble Under Latest Scandal
It’s not always easy to be an emerging market investor.
[](/contributors/cinthia-murphy)
[By Cinthia Murphy](/contributors/cinthia-murphy)
May 18, 2017
Edited by: Cinthia Murphy
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So much for forging a bottom in emerging markets.
Brazil, one of the largest developing economies, and the “B” in “BRIC” \[Brazil, Russia, India, China\], suddenly took a nose dive Thursday following news that its president might be directly involved in an ongoing corruption scandal.
The country’s leading stock market, Bovespa, plummeted some 10% in early trade, extending losses as the morning went on. In the U.S., a fund like the [iShares MSCI Brazil Capped ETF (EWZ)](https://www.etf.com/EWZ)—the largest Brazil ETF, with $5.8 billion in assets—was faced with a startling dip in performance, dropping some 16% Thursday morning.
EWZ is now down for the year, as the chart below shows:
**New Corruption Case**
The latest news connects President Michel Temer with an effort to silence a crucial witness in a corruption case. This effort, which allegedly was caught on tape, also involves a key senator that some expected would run for president in the next election.
It’s yet another case of the mighty falling.
Brazil was still healing from a scarring impeachment process that ousted its elected President Dilma Rousseff last summer, and this time, it sent investors running for the doors. A troubled Temer is less likely to effectively implement much-needed reforms the market was looking for.
Brazil represents about 8% of the MSCI Emerging Markets Index today, and nearly 9% in the FTSE Emerging Markets benchmark. The country’s pain this morning was weighing on broader emerging market ETFs tracking these indices, including the [iShares Core MSCI Emerging Markets ETF (IEMG)](https://www.etf.com/IEMG), the [iShares MSCI Emerging Markets ETF (EEM)](https://www.etf.com/EEM) and the [Vanguard FTSE Emerging Markets ETF (VWO)](https://www.etf.com/VWO). These three ETFs together command some $117.5 billion in assets:
Beyond these funds, there are [11 Brazil-focused ETFs](https://www.etf.com/topics/brazil-etfs) on the market today, all of them feeling the pinch of the country’s latest round of corruption allegations involving high-ranking officials.
No ETF was hit harder than the [Direxion Daily MSCI Brazil Bull 3X Shares (BRZU)](https://www.etf.com/BRZU), which delivers 3x the daily performance of its underlying index, and has $87 million in assets.
It’s a relatively small fund that Thursday morning was packing a serious punch: BRZU plunged 47% in early trade Thursday—roughly three times the losses EWZ was facing. The decline brought the fund’s year-to-date losses to 11.8%.
*Charts courtesy of [StockCharts.com](https://www.stockcharts.com/)*
For a complete list of all Brazil-focused ETFs, check out our [Brazil ETF channel](https://www.etf.com/topics/brazil-etfs).
*Contact Cinthia Murphy at* [*cmurphy@etf.com*](mailto:cmurphy@etf.com)
[ Cinthia Murphy ](/contributors/cinthia-murphy)
Cinthia Murphy is head of digital experience, advocating for the user in all that etf.com does. She previously served as managing editor and writer… [View Bio](/contributors/cinthia-murphy)
Related Topics [Emerging Markets](http://www.etf.com/topics/emerging-markets)
[Brazil](http://www.etf.com/topics/brazil)
[Equity](http://www.etf.com/topics/equity)
[Total Market](http://www.etf.com/topics/total-market)