With Brazil due to host the World Cup next year and the Olympics in 2016 this major emerging market will be very much in the public eye. However, for investors, Brazil is not just of interest over the next three years: this is a long-term investment story increasingly driven by domestic factors.
- Strong growth prospects
- Domestic economy exposure
- Reasonable charge
- Concentrated emerging market risk
- Short track record
"Many investors perceive Brazil as a China play, driven primarily by a demand for commodities," says Elizabeth Savage, research director at asset manager Rathbone. "This is a misconception, perpetuated by the construction of the Brazilian equity indices, which are dominated by Petrobras and Vale. Brazil is not as sensitive to global growth as many think, and exports are, at most, around 15 per cent of gross domestic product (GDP). With the world's fifth largest population and a median age of 29 years, Brazil enjoys favourable demographics.