Arbor Asset Allocation Model Portfolio (AAAMP) Blog

By Ken Faulkenberry

Brazil has the tenth largest economy in the world and the fifth largest as measured by land mass. With a population of 193 million and a 2 trillion dollar economy, it is a political and economic leader in Latin America.  However, social and economic problems have kept it from being an effective global power. But future economic growth may drastically change the role of Brazil in our world.

The booming global demand for commodities, particularly energy and agriculture, is a major proponent of a robust Brazilian economy. Brazil is now a global power in agriculture and natural resources; two areas that are expected to provide strategic advantages for decades to come. (See “Five Essential Themes for your Portfolio in 2010: http://tinyurl.com/yaj576a).

Brazilian exports are booming and include aircraft, electrical equipment, automobiles, ethanol, textiles, footwear, iron ore, steel, coffee, orange juice, soybeans, and beef.  The country has been increasing its’ presence in international financial and commodities markets and is perfectly situated to take advantage of global trends. It can meet growing demand for its’ products with an ample and efficient work force at competitive prices. Hosting the 2016 Olympics is only going to accelerate the economic growth of Brazil including billions of dollars in infrastructure investment that will benefit the country for the next decade and beyond.

How and when you make investments in any emerging market country is critical to investment success. Diversification is always an important consideration and therefore low cost ETFs are a great way to add country specific investments to your portfolio. But due to severe volatility; your asset allocation should be small and only made on pullbacks in prices.

The Arbor Asset Allocation Model Portfolio (AAAMP), for the benefit of Arbor Investment Planner subscribers, holds a position in the ishares MSCI Brazil Index ETF (EWZ).  If you would benefit from specific investment options and help with asset allocation, the Arbor Investment Planner can help you manage your own portfolio.

More information at: www.ArborInvestmentPlanner.com