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For investors looking for momentum, the VanEck Vectors Brazil Small-Cap ETF BRF is probably on your radar now. The fund just hit a 52-week high. Shares of BRF are up roughly 71.1% from its 52-week low price of $12.18/share.
But could more gains be ahead for this ETF? Let’s take a quick look at the fund and the near-term outlook to get a better idea on where it might be headed:
BRF in Focus
BRF focuses on providing exposure to Brazil’s small-cap equities, thus serving as a pure play on the Brazilian economy. Consumer Discretionary, Utility, and Health Care are the top three sectors, with 29.2%, 12.2%, and 11.6% allocation, respectively (as on March 31, 2017). It charges 60 basis points in fees per year and has top holdings in Bradespar Sa, Qualicorp Sa , and Fleury Sa with a little over 12.8% collective allocation to them (see all Broad Emerging Market ETFs here).
Why the Move?
Lately, the Brazilian economy has been gaining a lot of traction, as people took to the streets protesting against President Michel Temer’s austerity plans. Though his approval rating is low, Temer and his government have stated that this strike will not hinder the reforms. This instilled confidence among traders, as the Bovespa Index closed 2.02% higher on Tuesday, May 2, 2017. Moreover, small cap companies are domestically focused and provide a more refined exposure to the region.
More Gains Ahead?
Currently, BRF has a Zacks ETF Rank #3 (Hold) with a High risk outlook. So it is hard to get a handle on its future returns one way or another. However, it has a weighted alpha of 57.9 and a 14-day volatility of 23.50%. So, there is definitely a promising outlook ahead for those who want to ride this surging ETF a little further.
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