3 ETFs for Brazil's Stimulus (BRAQ, BRXX, FBZ)

In a familiar approach seen in the U.S. and China, Brazil is employing stimulus measures to boost its sagging economy. The largest Latin American economy reported first-quarter GDP growth of just 0.2 percent, hardly on par with what investors expect from an emerging market and well below the 0.5 percent growth economists expected. President Dilma Rousseff has rolled out an array of stimulus projects aimed at suppressing Brazilian unemployment (already low at 5.8 percent), moves that have her approval rating resting near 60 percent despite the country's economic slowdown,
according to the New York Times
. To this point, Brazil's stimulus measures have yet to bare fruit for investors in ETFs such as the iShares MSCI Brazil Index Fund
. The largest Brazil ETF by assets, EWZ has tumbled 11.4 year-to-date and 22.3 in the past 90 days. Increasing concerns about an economic hard landing in China, Brazil's largest trading partner, coupled with the slack performance of state-run oil giant Petrobras
PBRhave plagued EWZ
. Given EWZ's exposure to Brazil's commodities-driven export story, investors should consider more domestically focused funds as a way of potentially benefiting from the country's stimulus plans.
EGShares Brazil Infrastructure ETF BRXX
Much has been made about global infrastructure spending. In 2011, a Bank of America Merrill Lynch report fanned the flames of this investment thesis by saying
select emerging markets would spend up to $6 trillion on infrastructure projects over the next three years
. Brazil should be among the nations spending heavily on infrastructure in the coming years. BRXX is widely viewed as a play on Brazil hosting the 2014 World Cup and the 2016 Summer Olympics, but there's more. As the New York Times reported, so many Brazilian infrastructure projects have been approved at the same time, that just a fifth of the $7 billion budgeted for highway projects in 2012 has been spent.
Global X Brazil Consumer ETF BRAQ
While economic growth is cooling in Brazil, it is worth noting that consumer-related deal-making
is flourishing, indicating companies are betting on a resurgent Brazilian consumer
. Incomes are rising and interest rates are low, two fundamental factors that support a bullish outlook on the Brazilian consumer and BRAQ. There is a bear case, though. Amid access to easy credit, the Brazilian consumer has already spent. Now he/she is looking at elevated personal debt and is paring spending to reduce that debt burden.
First Trust Brazil AlphaDEX Fund FBZ
The First Trust Brazil AlphaDEX Fund debuted last April as a potential rival to EWZ. That rivalry has yet to materialize, but it should because FBZ's weighting methodology and the
index it tracks have generated superior performance
. The biggest risk with FBZ is a 22.2 weight to materials stocks, but on the upside, Petrobras is not nearly as prominent in FBZ as it is in EWZ. In addition, FBZ is 44 percent allocated to more the conservative consumer staples and utilities sectors. Year-to-date, FBZ has outperformed EWZ by 500 basis points. For more on Brazil ETFs, click

Posted In: Dilma RousseffLong IdeasNewsSector ETFsShort IdeasSpecialty ETFsEmerging Market ETFsCommoditiesEventsGlobalEcon #sEconomicsIntraday UpdateMarketsTrading IdeasETFs

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.