WisdomTree (NASDAQ:WETF), the sixth-largest U.S. ETF sponsor by assets under management, has filed plans with the Securities and Exchange Commission to possibly introduce a low volatility ETF focused on Brazilian equities.
The fund would be called the WisdomTree Brazil Low Volatility Equity Fund and would track the WisdomTree Brazil Low Volatility Equity Index. That index is comprised of the 50 Brazilian companies with the best combined rank of three factors: historical volatility, return on equity, and return on assets, according to the filing.
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Individual stock exposure is capped at three percent while no sector can be weighted in excess of 25 percent in the index, the filing notes. The filing did not include a ticker or expense ratio for the ETF.
While some Brazil-specific ETFs have been laggards compared to other emerging markets funds, some of the products remain popular with investors. For example, the iShares MSCI Brazil Capped Index Fund (NYSE:EWZ), the largest Brazil ETF, has nearly $8 billion in assets. The Market Vectors Brazil Small-Cap ETF (NYSE:BRF) has nearly $516 billion in AUM.
Still, Brazil ETFs can be volatile. EWZ has a three-year standard deviation of 27.4 percent and a beta of 1.31 against the S&P 500, according to iShares data. Those statistics combined with the soaring popularity of low volatility ETFs indicate the WisdomTree Brazil Low Volatility Equity Fund could be a successful ETF over time.
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