4 ETFs To Help Bet On Brazil's Soccer Team (EWZ, BRF, EWZS, BRXX)
It appears Goldman Sachs is now in the business of predicting sporting events.
The investment firm predicts the Brazilian soccer team will win the World Cup that begins on June 12. The host team is a heavy favorite to win the prestigious event, but a prediction from an investment firm has to be a first.
An analyst at the firm makes a bold statement saying the odds of Brazil winning the World Cup are three times that of the second favorite, Argentina.
According the Goldman report the win by Brazil will boost its stock market in the first month after winning the event.
The winning country’s equity market historically outperforms global stocks by 3.5 percent on average in the first month after the victory.
Brazil’s stock index, the Bovespa, is down about seven percent in 2014 even though it has been a top global performer over the last two months. The iShares MSCI Brazil Index ETF (NYSE: EWZ) is up 5.5 percent in 2014, but down 10 percent over the last two years.
See also: A New Brazil Rally In ETFs?
Investors looking to play the overall large-cap Brazilian stock market could consider EWZ as an option. Investors interested in focusing on the small-cap portion of the country have the Market Vectors Brazil Small-Cap ETF (NYSE: BRF), which is down one percent this year and has lost 18 percent over the last two years. The iShares MSCI Brazil Small Cap Index ETF (NYSE: EWZS) is down 15 percent over the last two years and is up one percent in 2014.
A popular option over the last few years has been the EG Shares Brazil Infrastructure ETF (NYSE: BRXX) based on the thesis that there would be a huge cash influx into upgrading the nations infrastructure system. While there have been large amounts of money spent on the upgrades, the problems have outweighed the expectation. The ETF is down five percent this year and has lost 23 percent in the last two years.
Being able to predict the winner of the World Cup sounds like a tough enough task for most individuals, therefore suggesting Brazil will win and the market will outperform sounds like a daunting task. But for the gamblers out there, this is a good bet according to Goldman.
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