Latin America appears to have become a popular investing destination for some of the world’s wealthiest people. Using ETFs, investors can mimic these individuals’ adventures into the nations south of the United States.
In mid-February, Brasil Foods(BRFS_), a food giant in Brazil, spiked after a news report hinted that billionaire Warren Buffett had taken a liking to the company and may be interested in a substantial investment in the firm.
Although Buffett has maintained a bullish outlook on the U.S. economic recovery and has typically relied on the performance of domestic firms to grow his wealth, he has increasingly taken steps outside of the U.S. to locate attractive new ventures.
Large emerging markets such as those comprising the popular BRIC acronym appear have become regions of interest for Buffett. The famous investor holds a large position in BYD, the Chinese electric car company, and throughout the past year he has visited both China and India in search of investment opportunities.
Brasil Foods boasts a number of qualities which make it appealing given the current state of Buffett’s Berkshire Hathaway(BRK.A_) portfolio. Aside from being large and stable, the firm is in the consumer staples industry, typically a popular market region for the investor. According to Bloomberg, speculation is that Buffett could ultimately own 5% of the company.
ETF investors looking for access to Brasil Foods can turn to the iShares MSCI Brazil Index Fund(EWZ_). This fund is designed to track a basket of the largest and most liquid companies in Brazil. BRFS manages to find a place among its top 15 holdings and accounts for close to 2% of its total portfolio.
While EWZ is a strong choice for investors seeking direct access to Brasil Foods, the Market Vectors Brazil Small Cap Index ETF(BRF_) is another option those looking to mimic Buffett’s venture in Brazil’s marketplace may want to consider.
EWZ’s index boasts some exposure to consumer-focused companies such as BRFS. However, the majority of the fund is dedicated to materials and energy leaders such as Vale and Petrobras(BRF). BRF, meanwhile, is focused on smaller Brazilian firms, which are more heavily influenced by the nation’s growing middle class. Though not a component, consumer companies similar to Brasil Foods represent over a quarter of the fund’s index.
Whereas Buffett appears to have his sights set on Brazil, the world’s richest man, Carlos Slim, has placed Colombia on his radar. This week it was announced that the Mexican billionaire and head of the telecom empire America Movil(AMX_) is acquiring a 70% stake in Tabasco Oil Company in an effort to gain a foothold into the nation’s energy industry.
The Global X FTSE/Interbolsa Colombia 20 Index Fund (GXG) is a way ETF investors can copy Slim. In attempting to expose investors to the largest companies hailing from Colombia the fund provides heavy dedication to the nation’s energy industry. In total, oil and gas account for over a third of the fund’s total index.
EWZ, BRF, and GXG are three liquid ETF options investors can consider when attempting to take advantage of the preferences of some of the world’s most famous billionaires. In each case, investors should maintain small, focused positions in order to avoid the volatility that comes with exposure to emerging markets.