Macro Tsimmis

intelligently hedged investment

BUY MSCI Brazil Index (EWZ—yet again)

Posted by intelledgement on Mon, 03 Aug 09

Again, it makes sense to be long Brazil strategically, as we stated back in 2006. We have moved out of our position here twice due to the risk that the odds in favor of a sharp world-wide decline that will take Brazilian equities with it had waxed. But here and now, the risk is in not being long; under these conditions a position here is di rigeur.

The instrument of our investment in Brazil is the iShares MSCI Brazil Index (EWZ). This exchange-traded fund is heavily weighted towards commodities (27%), energy (27%) and financials (19%), as befits a fund for a rapidly developing country with a maturing economy. There is also significant representation for utilities (8%), consumer staples (7%), telecom (4%), and consumer discretionary, industrials, and information technologies (2% each). The P/E ratio is running around 13 and the yield is 4%. EWZ is very heavily traded (21 MM shares/day).

Previous EWZ-related posts:

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