Checking In: Solid Start For First Trust Brazil ETF
When First Trust, the Illinois-based ETF issuer with over $8 billion in assets under management, rolled out its suite of AlphaDEX international ETFs last month, we noted one of the more interesting options within group was the First Trust AlphaDEX Brazil Fund (NYSE: FBZ).
We also noted FBZ was going to be facing some stiff competition as the arena of ETFs offering exposure to Brazil as that number is close to 70 occupants and doing battle with an ETF like the iShares MSCI Brazil Index Fund (NYSE: EWZ) is no small task.
Just about six weeks removed from its April debut, it appears that FBZ is getting along quite nicely, thank you very much. Whether it's a result of a unique concept, investors looking for another way of garnering Brazil exposure beyond the usual suspects or a combination of those factors, FBZ has attracted over $7.4 million in AUM since its debut.
No, it's not reasonable to expect that FBZ will continue attracting over $1 million in AUM per week as it has thus far, but it is clear this new Brazil ETF is off to a fine start and investors are not being deterred by its 0.8% expense ratio.
FBZ is proving to be a great example of why investors need to realize that just because two ETFs have Brazil (or any other country or sector) in their titles, that doesn't ensure lock-step performance. In fact, FBZ is proving to be the superior alternative to EWZ in recent weeks. In the past month, FBZ is down just half a percent while EWZ is off 3%.
One reason for that may FBZ's defensive nature. For the investor that wants to play Brazil's high beta ways through names like Vale (NYSE: VALE) and Petrobras (NYSE: PBR), EWZ will probably always be the ETF standard.
On the other hand, investors that want to play a little defense without sacrificing emerging markets exposure should look at FBZ. Utilities, telecoms and consumer staples names account for over 43% of the weight in this 52-stock ETF.
The Brazil ETF story is far from over, but at this point, it's fair to say the chapter on FBZ should not be overlooked.
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