Here’s a move I’m planning on making in my IRA beginning tomorrow. I bought EWZ, the Brazil iShares/ETF, back in October of 2004. It’s up just over 63% since my purchase. (Note that UBB, a Brazilian bank, is up about 87% from when I said it was in a good buying position on October 18th. Also, EWZ is the #2 top-performing ETF over the last 12 months.)
Thanks to a post by Random Roger on Thursday I just discovered another way to get exposure to Brazil. Roger pointed out that BZF, a closed-end fund, has been out-performing EWZ. After doing a bit of research I discovered that BZF has about half of EWZ’s exposure to energy. Given that energy has been the sector for the past year I’m very impressed by BZF’s performance in relation to EWZ. (I’m not a full-blown energy bear but I also don’t like that head & shoulders pattern in the Crude Oil chart.)
I’ve been planning on paring my EWZ position down just to rebalance my portfolio. But now I’m going to sell all of my EWZ and replace it with a smaller position in BZF. I’ll be waiting for a pullback in BZF before I make my purchase though.
Here are charts of EWZ and BZF followed by the sector weightings of EWZ and BZF respectively:
Related reading: This article, ‘ETFs vs. Closed-End: Read the Fine Print‘, talks about the differences between EWZ and BZF.
