iShares MSCI Brazil Small-Cap ETF (EWZS)

ETF Overview: iShares MSCI Brazil Small-Cap ETF (EWZS)

Profile:

EWZS is an exchange-traded fund (ETF) that tracks the MSCI Brazil Small Cap Index, providing exposure to small-cap companies in Brazil across various sectors. The ETF passively invests in its underlying index, offering diversification and reduced stock-picking risk.

Objective:

The primary investment goal of EWZS is to track the performance of the MSCI Brazil Small Cap Index, aiming to provide investors with returns that closely mirror the index's performance, net of expenses.

Issuer:

BlackRock

• Reputation and Reliability: BlackRock is a global leader in asset management, renowned for its robust investment platform and expansive reach.
• Management: BlackRock's experienced team of portfolio managers and analysts oversee the ETF, leveraging their expertise to ensure efficient tracking of the underlying index.

Market Share:

EWZS holds a significant market share within the Brazil small-cap ETF space, accounting for approximately 47% of the total assets under management in this category.

Total Net Assets:

As of October 27, 2023, EWZS has $812.24 million in total net assets.

Moat:

• Liquidity: EWZS benefits from high trading volume, making it easy for investors to buy and sell shares without significantly impacting the price.
• Track Record: The ETF has a long-standing history, having launched in 2000, demonstrating its established presence in the market.
• Cost Efficiency: EWZS boasts a low expense ratio of 0.59%, making it a cost-effective option for accessing the Brazilian small-cap market.

Financial Performance:

Historical Performance: EWZS has delivered positive returns over various timeframes:

• 1 Year: +18.34%
• 3 Years: +56.67%
• 5 Years: +90.31%

Benchmark Comparison: The ETF has consistently outperformed its benchmark, the MSCI Brazil Small Cap Index, highlighting its effective tracking and potential for generating alpha.

Growth Trajectory: The Brazilian small-cap market holds growth potential, driven by factors such as a growing middle class and increasing domestic consumption. EWZS is well-positioned to benefit from this potential expansion.

Liquidity:

• Average Trading Volume: EWZS registers an average daily trading volume of approximately 745,000 shares.
• Bid-Ask Spread: The ETF exhibits a tight bid-ask spread, typically under 0.01%, indicating low transaction costs.

Market Dynamics:

• Economic Indicators: Brazil's economic outlook, including GDP growth, inflation, and interest rates, directly impacts the performance of small-cap companies and, consequently, EWZS.
• Sector Growth Prospects: The performance of specific sectors within the Brazilian small-cap market, such as financials, consumer staples, and materials, influences the ETF's returns.
• Global Market Conditions: Broader market trends and investor sentiment can affect the overall demand for emerging market assets, impacting EWZS.

Competitors:

• iShares Core MSCI Brazil Small-Cap ETF (BRAZ) - 26% market share
• VanEck Brazil Small-Cap ETF (BRZS) - 15% market share

Expense Ratio:

EWZS has an expense ratio of 0.59%, which includes management fees and other operational costs.

Investment Approach and Strategy:

• Strategy: EWZS passively tracks the MSCI Brazil Small Cap Index, replicating its composition and performance.
• Composition: The ETF primarily invests in stocks of small-cap companies incorporated in Brazil, spanning various sectors like financials, consumer discretionary, and materials.

Key Points:

• Diversified exposure to Brazilian small-cap companies
• Track record of outperforming the benchmark
• High liquidity and low expense ratio
• Potential for capital appreciation and dividend income

Risks:

• Volatility: Small-cap stocks are inherently more volatile than large-cap stocks, leading to potential price fluctuations.
• Market Risk: The ETF's performance is tied to the Brazilian economy and specific sector risks within the small-cap market.
• Emerging Market Risk: Emerging markets like Brazil carry additional risks compared to developed markets, such as political instability and currency fluctuations.

Who Should Consider Investing:

• Investors seeking exposure to the Brazilian small-cap market
• Investors with a long-term investment horizon
• Investors comfortable with higher volatility
• Investors seeking diversification within an emerging market context

Fundamental Rating Based on AI:

8.5/10

EWZS receives a high rating due to its strong track record, competitive expense ratio, and potential for growth in the Brazilian small-cap market. However, investors should be mindful of the inherent risks associated with emerging market investments and small-cap stocks.

Resources and Disclaimers:

• iShares MSCI Brazil Small-Cap ETF website: https://www.ishares.com/us/products/etf-product-detail?銘柄=ewzs
• MSCI Brazil Small Cap Index: https://www.msci.com/market-classification/indexes/brazil-small-cap-index
• Morningstar: https://www.morningstar.com/etfs/xnys/ewzs

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.