How Americans Can Buy Brazilian ETFs on U.S. Brokerages


Key Takeaways

  • U.S. investors can access Brazilian markets via ETFs listed on NYSE and Nasdaq.

  • These ETFs track equities, dividend stocks, or broad Brazilian indices.

  • Major U.S. brokerages like Fidelity, Schwab, and TD Ameritrade offer access.

  • Currency fluctuations impact returns even with U.S.-listed ETFs.

  • ETFs simplify diversification compared to direct investing in Brazil.

Executive Summary

Brazil offers attractive opportunities in dividend stocks, commodities, and financials. But for American investors, direct access to B3 (the Brazilian stock exchange) can be challenging. Instead, Brazilian ETFs listed on U.S. exchanges provide a liquid, regulated way to gain exposure.

This article explains how U.S. investors can buy these ETFs through major brokerages, outlines the top options, and highlights key risks and strategies.

Market Context: Brazil in Global Portfolios

  • Brazil represents ~5% of global emerging market indices.

  • U.S. demand for international diversification is rising as investors seek growth outside the S&P 500.

  • ETFs bridge the gap by offering easy access to Brazilian equities without navigating local custody and tax rules.

How Brazilian ETFs Work in U.S. Markets

  • Brazilian ETFs on U.S. exchanges hold ADRs or directly track Brazilian stocks.

  • They trade in USD, eliminating the need for foreign accounts.

  • Dividends are paid in USD, after accounting for Brazilian withholding taxes.

  • Liquidity is strong, with billions in assets under management.

Popular Brazilian ETFs in the U.S.

1. iShares MSCI Brazil ETF (EWZ)

  • Tracks large- and mid-cap Brazilian equities.

  • Highly liquid, ~$5B AUM.

2. iShares MSCI Brazil Small-Cap ETF (EWZS)

  • Focuses on small-cap opportunities.

  • Provides exposure to domestic-oriented sectors.

3. Global X MSCI SuperDividend EAFE ETF (EFAS) – Brazil component

  • Includes Brazilian dividend payers.

  • Attractive for income-focused investors.

4. Other thematic ETFs

  • Commodity-linked ETFs with Brazil exposure.

  • ESG-oriented funds covering Latin America.

Bulls vs. Bears on Brazilian ETFs

Bull Case:

  • High dividend yields compared to U.S. equities.

  • Commodity exposure enhances diversification.

  • ETF structure simplifies compliance for U.S. investors.

Bear Case:

  • Currency depreciation reduces USD-denominated returns.

  • Political risk increases volatility.

  • Concentration in a few large companies (Petrobras, Vale, Itaú).

Catalysts and Risks

Catalysts:

  • Falling Brazilian interest rates increase equity valuations.

  • Growth in foreign inflows to emerging markets.

  • Commodity supercycles boosting earnings.

Risks:

  • BRL volatility vs. USD.

  • U.S. Fed tightening reducing EM inflows.

  • Sector concentration risk in energy and financials.

Scenario Playbook

  • Base: EWZ yields ~5% dividend, moderate growth.

  • Bull: BRL strengthens, ETFs deliver double-digit USD returns.

  • Bear: BRL weakens, political risk rises, ETFs underperform S&P 500.

How to Buy Brazilian ETFs on U.S. Brokerages

  • Step 1: Open an account with a major U.S. brokerage (Fidelity, Schwab, E*TRADE, TD Ameritrade).

  • Step 2: Search for ticker symbols (EWZ, EWZS).

  • Step 3: Place order like any U.S. equity or ETF.

  • Step 4: Monitor FX movements and fund performance.

  • Step 5: Reinvest dividends to compound exposure.

Comparison: ETFs vs. Direct Investment in Brazil

  • ETFs: simple, liquid, regulated in the U.S., dividends in USD.

  • Direct Investment: higher complexity (custody, taxes), but more stock selection flexibility.

  • BDRs (in Brazil): not available directly to U.S. investors.

For most American investors, ETFs provide the most efficient entry point.

Case Study: U.S. Investor Using EWZ

  • In 2023, EWZ delivered ~18% total return in USD.

  • BRL appreciation enhanced gains despite political noise.

  • Demonstrates how ETFs can capture both yield and FX cycles.

FAQs

1. Can Americans buy Brazilian ETFs without opening a foreign account?
Yes, if the ETF is listed on a U.S. exchange like NYSE or Nasdaq.

2. What are the main risks of Brazilian ETFs?
Currency volatility, concentration risk, and political uncertainty.

3. Do Brazilian ETFs pay dividends in USD?
Yes, dividends are converted and distributed in USD.

4. Which ETFs are most popular?
iShares MSCI Brazil ETF (EWZ) and EWZS for small caps.

5. Are ETFs better than ADRs?
ETFs offer diversification, while ADRs provide direct single-stock exposure.

Bottom Line

Brazilian ETFs listed on U.S. brokerages make it easier than ever for Americans to diversify globally. With high yields, exposure to commodities, and access to Latin America’s largest economy, they are a practical gateway—though FX and political risks must be carefully monitored.

Disclaimer & Sources

Not investment advice. For educational purposes only.
Sources: SEC, Bloomberg, WSJ, Morningstar, Valor Econômico.

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