iShares MSCI Brazil Capped ETF (EWZ) is up 92.5%
EWZ is a total market portfolio of Brazilian securities, and the market’s largest, with $5.6 billion in assets. It’s the most popular Brazil ETF.
The fund is a vanilla, market-cap-weighted approach to total market Brazil exposure. It’s large, it’s liquid and, overall, competitively priced for the access it offers.
With an expense ratio of 0.63%, EWZ trades more than $550 million a day, on average, with an average spread of only 0.03%. The 53-holding portfolio has a weighted average market cap of $34 billion.
Financials are by far the biggest sector bet in EWZ, representing about 40% of the portfolio. Consumer staples and energy round out the top three sector allocations, and together, the three represent roughly three-quarters of the overall mix.
First Trust Brazil AlphaDex Fund (FBZ) is up 91%
FBZ is a smart-beta take on Brazilian equities. The quantitative approach—a trademark of its issuer, First Trust—doesn’t look for neutral exposure to Brazil; it seeks companies likely to outperform the market.
The multifactor security selection process and the tiered weighting scheme result in a portfolio that tilts smaller than other broad funds. The weighted average market cap in FBZ is $8.4 billion.
The methodology also leads to sector tilts that are different from a vanilla total-market approach—something investors should see as increased risk, which is unsurprising give that the fund seeks to outperform the market.
Financials, utilities and basic materials are the biggest sector bets, representing about 60% of the portfolio.
FBZ, which came to market in 2011, has $139 million in assets and costs 0.80% in expense ratio. It’s also worth noting here that average spreads are a wide 0.72%, so the costs of trading this fund can quickly add up.