How to Invest with the World Cup Host

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Brazil is one of the fabled BRIC (Brazil, India, Russia and China) emerging-market juggernauts, but in recent years the country has lost a great deal of its investment star power. The Brazilian government mismanaged spending on stadiums and other athletic facilities in its role as the host of this year’s World Cup and the 2016 Summer Olympics. The mismanagement is just the latest indicator of how the Brazilian economy has been misdirected under President Dilma Rousseff.

Yet recent polls suggest that Brazilians soon may elect a new leader. And two major global sporting events in three years will serve to raise Brazil’s profile on the world stage. Thus, there is potential for Brazil to make a turnaround from its current 2% growth rate back to the 4% growth it hit in the late 1990s. One way to buy into that turnaround is via the iShares MSCI Brazil Capped (EWZ).

EWZ seeks to track the investment results of an index of equities on the Brazilian stock exchange. The free float-adjusted market capitalization-weighted index uses a capping methodology to insure investment diversity. So far this year, EWZ has seen a gain of 9.51%, after dips in February, April and May. It offers a yield of 3.11%. Many expect stronger growth in October, due to an incoming reformist administration.


EWZ’s holdings are concentrated in the financial services sector, 28.68%, and the consumer defensive sector, 25.33%. Other held sectors include energy, basic materials, industrials and consumer cyclicals. EWZ’s top 10 stock holdings make up 42.23% of its total assets. Among them are ITAU Unibanco, 8.32%; Ambev, 7.07%; Bradesco, 6.00%; Vale, 4.43%; and Petrobras, 4.22%.

As the world’s attention has returned to Brazil, investors are starting to invest more money there. One way you can do so, too, is through the broad investment holdings of iShares MSCI Brazil Capped (EWZ).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my article from last week about why China could be ripe for a rebound. I also invite you to share your thoughts below.

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