ETF Trends CEO Tom Lydon discussed the VanEck Vectors Brazil Small-Cap ETF (BRF) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
BRF offers targeted exposure to Brazil's small cap segment, making it a powerful tool that can be used to fine-tune equity portfolios. Given the granularity of this fund, BRF likely has some appeal to long-term investors with a buy-and-hold philosophy but it is more likely to appeal to those looking to implement a tactical shift or capitalize on perceived mispricings over a relatively short time horizon. However, some might view the product as a more accurate representation of the Brazilian economy instead of the top-heavy-- as well as energy and financial heavy-- EWZ. Small and mid caps are thought by many to offer more of a pure-play on national economies but small caps are likely to offer less stability than their mid cap brethren but could offer higher returns over the long run. However, this targeted exposure comes at a price as the fund has only about 40 holdings in total and it has high levels of concentration in some of its top holdings. But for efficient, targeted exposure to Brazil's small caps, BRF can certainly deliver. The expense ratio on this fund is comparable to other products in the category, and given its focus on small caps, this suggests that the fund is a pretty good value for investors and traders alike.