The largest ETF tracking Brazilian equities is heading for its worst month ever as investors grow increasingly concerned about the political turmoil afflicting Latin America’s biggest economy.
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The largest ETFs that track the two asset classes posted about $3.1 billion of withdrawals last week.
February 5 -
The benchmark MSCI emerging markets index advanced more than 11% last year, and this year to date gained another 14%.
May 15 -
After stellar performance in a hectic decade, advisors home in on these funds.
February 13
The $6 billion iShares MSCI Brazil ETF (EWZ) has had about $710 million of outflows in August, the most in its history. The BlackRock fund, which started in July 2000, hasn’t seen a day of inflows since June 18.
The latest wave of opinion polls in Brazil show that market-friendly presidential candidate, former Sao Paulo Governor Geraldo Alckmin trails and highlighted voter support for the Workers’ Party, known as PT.
“Recent polls are clearly not boosting investor sentiment,” said Michael Reynal, a fund manager at Sophus Capital in Des Moines, Iowa, who oversees $850 million in assets. “The market is worried that the reform process could be derailed.”
In the first half of the year, EWZ had almost $630 million of net inflows. But that changed in July as investors pulled $342 million. Then the fund’s price started falling, tanking by more than 12% since Aug. 1. On Aug. 15, investors pulled $202 million from the ETF, the largest single-day outflow in almost five years. The value of the Brazilian equities tracked by U.S.-listed fund is currently $5.9 billion, the lowest in more than a year, according to data compiled by Bloomberg Intelligence.
