Foundations Favor Brazil

Political strife in the Middle East has discouraged investor enthusiasm for emerging markets,  but certain countries continue to attract institutions. Some big endowments and foundations favor Brazil and prefer to get wide-ranging exposure to the country’s stock market via exchange-traded funds, rather than investing with active managers.

Among these are Harvard University’s endowment and the Broad Foundation, an organization created by Los Angeles philanthropist  and art collector Eli Broad.

Both institutions have built sizable positions in Brazil index funds. Harvard held close to $200 million in iShares Brazil as of a couple months ago. The Broad Foundation went for the Market Vectors Brazil exchange-traded fund.

Once you decide you want to have a particular country in your portfolio, it makes sense to get an index fund, says an investor. Active managers in emerging markets, whether long/short or long-only, tend to move among countries and may not provide the specific exposure you want.

But emerging markets on the whole are now a larger part of institutional portfolios. Increasingly, the EM portion of a portfolio is structured to catch both market growth and returns from specialist managers, meaning a core of index funds is supplemented with hedge funds active in these markets. Thus Yale University’s endowment invests in an all-purpose emerging markets ETF but also seeks alpha-making managers.

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One Response to “Foundations Favor Brazil”

  1. Temasek Double Bet on Brazil Oil « HedgeFundSmarts Says:

    […] HedgeFundSmarts Top News and Analysis about Non-Traditional Investing « Foundations Favor Brazil […]

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