BRAQ: First ETF to Truly Target Brazil’s Consumer Sector

The Global X Brazil Consumer ETF (BRAQ) began trading on 7/8/2010.  This new ETF will focus on the increasingly important consumer sector of Latin America’s largest economy.  The launch of Market Vectors Brazil Small Cap (BRF) a year ago was touted as a play on Brazil’s internal growth with a tilt toward consumer spending, as was the Global X Brazil Mid Cap ETF (BRAZ) last month.  However, BRAQ is the first ETF to truly target the potentially lucrative consumer sector of Brazil.

The underlying Solactive Index from Structure Solutions AG weights each component proportionally according to its free float market capitalization. The weight of any stock is capped at 4.75% to help ensure diversification and broad coverage of the sector.  Excess weight is allocated proportionally to components that are not capped.  Additionally, the cumulative weighting of stocks that do not meet specific liquidity criteria is capped at 10%.

The BRAQ fund summary lists an expense ratio of 0.77% and provides links to other data sources.  The BRAQ fact sheet (pdf) shows the current number of holdings at 28 (the index allows for a maximum of 40), and the list of holdings suggest at least a dozen stocks were limited to the 4.75% cap during the initial allocations.  Industry weightings within BRAQ are Food & Beverage 34.5%, Retail 25.2%, Personal & Household Goods 18.9%, Travel & Leisure 15.6%, and Media 5.8%.

The prospectus (pdf) shows a whole family of Brazil ETFs including Brazil Financials ETF (BRAF), Brazil Industrials ETF, Brazil Materials ETF, Brazil Utilities ETF (BRAU), and Brazil Mid Cap (BRAZ), which was launched on 6/22/10.  The Global X China Mid Cap (CHIA) is also included as part of the prospectus.

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.