Barclays Plc began trading of three new Brazilian Exchange Traded Funds in Sao Paulo to respond to investor demand for diverse and more easily tradable funds at a time of market volatility.
The ETFs, the first developed by Barclays in Brazil, replicate the Bovespa Index of the 66 most-traded stocks, the BM&FBovespa MidLarge Cap index and the BM&FBovespa Small Cap index. The first Brazilian ETF, the PIBB Fundo de Indice Brasil- 50 Brasil Tracker, was created in 2004.
“The type of product that we have here brings benefits for the times we’re living in,” Banco Barclays Director Marcelo Allain told reporters in Sao Paulo today. “The fund has the benefit that investors can enter and exit at any time and can better control their investment risk.”
Demand for ETFs in Brazil may follow the trend in Mexico and grow to as much as 20 percent of daily traded volume in five years, said Daniel Gamba, Barclays Global Investors’ chief executive for Latin America. The Bovespa had an average daily volume of about $3 billion during the past three months, more than six times the $440 million average volume of Mexico’s Bolsa.
The iShares MSCI Brazil Index Fund, managed by Barclays, is among the 10 most-traded ETFs in New York, with daily volume of about $1 billion, Gamba said. The MSCI Brazil fund has a market cap of $3.15 billion, according to Bloomberg data.
The three ETFs that began trading today have an original investment of 100 million reais ($42 million) from strategic investors, Allain said.
The Bovespa index gained 1.7 percent to 35,329.87 at 10:14 a.m. New York time. The iShares Ibovespa fund rose 0.7 percent to 35.34 reais after opening at 35.11 reais.
Investor demand for the funds will likely lead to the creation of additional indexes and funds, including two new indexes by the end of this year, said Murilo Robotton, executive director of products at BM&FBovespa, Latin America’s biggest exchange.
“We want to have new indexes so investors can have diverse means to invest” in Brazil, Robotton told reporters. The exchange is currently creating a homebuilders index. Robotton declined to give details about the second index.
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at firstname.lastname@example.org.
Source: Bloomberg, 2.11.2008
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