A New Brazil Infrastructure ETF: BRXX

Proving once again that emerging markets are fertile ground for new ETFs, yesterday (2/24/10) brought the launch of EGS INDXX Brazil Infrastructure Index Fund (BRXX) by Emerging Global Shares.  This follows last week’s introduction of a similar fund tracking China infrastructure stocks (CHXX).

The new Brazil ETF will track an index of thirty stocks that are in various ways involved in the development and maintenance of Brazil’s physical infrastructure: materials, mining, construction, utilities, telecom, etc.  The investment appeal is that these companies should prosper as they help Brazil transition into the ranks of developed nations.  According to the BRXX fact sheet, the average market cap is US$11.7 billion.  Top holdings are:

• Centrais Eletricas Barasileiras (5.5%)
• Companhia de Concessoes Rodoviarias (5.5%)
• Vivo Participacoes (5.2%)
• Vale S.A. (5.1%)
• Gerdau S.A. (5.0%)
• Net Servicos de Communicacao (4.9%)
• Ultrapar Participacoes (4.7%)
• Wege S.A. (4.6%)
• Telemar Norte Leste (4.5%)
• Brasil Telecom (4.5%)

As a bet on Brazilian economic growth, BRXX will probably do all right.  Some of the top holdings are major exporters, though, which means they may reflect the global economy more than the local one.  I will be curious to see how BRXX performs compared to Market Vectors Brazil Small-Cap (BRF).

The expense ratio for BRXX, after a partial waiver, is 0.85%.  Follow the links below for more information.

BRXX Overview

BRXX Fact Sheet (PDF file)

BRXX Prospectus (PDF file)

-Article by Patrick Watson of Invest With An Edge