Financial indices comparison
The Dow Jones Latin America Financials Index (DWLAFN) has plunged 20.03% year-to-date. This poor performance is largely due to Brazilian Financials. The MSCI Brazil Financial Index crashed 26% during the year. Comparatively, the MSCI Mexico Financials Index has lost 12.41% year-to-date. Brazil and Mexico are the largest economies in the Latin American Region in terms of GDP.
The iShares Latin America 40 ETF (ILF) has lost 14.52% so far in 2015.
The ILF ETF tracks the returns on an index composed of 40 of the largest Latin American Equities. Of its holdings, 49.28% are concentrated in Brazilian stocks while 33.37% are exposed to Mexico. The ETF’s investments are largely concentrated in financial stocks, with 30.6% of its holdings invested in the sector. Meanwhile, 20.04% is invested in consumer staples and 11.29% in telecommunications services.
This ETF’s largest holdings are America Movil, Itau Unibanco, and Ambev ADR, with weights of 11.29%, 7.99%, and 7.35%, respectively.
During the same period, the Global X Brazil Financials ETF (BRAF) has plunged 21.84%. In comparison, the iShares MSCI Brazil Capped ETF (EWZ), which tracks the broader markets, has lost 22.71%.
The Global X Brazil Financial ETF tracks the Solactive Brazil Financials Index. ~30% of its investments are concentrated in the largest Brazilian banks—namely, Banco Santander (SAN), Banco Bradesco (BBD), and Itau Unibanco (ITUB). These stocks account for 10.57%, 9.89%, and 9.62%, respectively, of the fund’s holdings.
Slack GDP estimates and a tumbling real are among the downside catalysts pressuring Brazilian stocks and EWZ. Brazil’s planning ministry attributes a major portion of the turn to the projected depreciation of about 21% in the real currency against the US dollar.
US-listed shares of Petrobras, Brazil’s state-run oil company, have lost nearly one-third of their value this year. Two Petrobras securities combine for 7.6% of EWZ’s portfolio.