Franklin FTSE Brazil ETF

FLBR

Market cap $427M

Brazilian equities (EWZ, FLBR) face a nuanced bull case driven by foreign capital inflows and anticipated interest rate cuts from 15% to 10.5% by 2027. Despite a 53% BRL rally in the Ibovespa, local investors remain cautious due to persistent fiscal risks, political uncertainty, and low equity risk premiums.

Investors poured twice as much into emerging markets in January as in all of 2025, betting on a weaker dollar and hedging U.S. risk.

Franklin FTSE Brazil ETF remains attractively valued despite outperforming emerging markets by over 10 percentage points in 2025. FLBR targets mid- and large-cap Brazilian stocks, with an average market cap around $35 billion and a 0.19% management fee. Key performance drivers include strong gains in Brazilian banking stocks like ITUB and BBD, supporting FLBR's resilience.

FLBR hits a 52-week high as Brazil's stronger currency and equity rally fuel momentum for the Brazil-focused ETF.

Volatility & insurance led gains last week! ETFs VIXI, UNG, KIE, KBWP & FLBR outperformed as AI sell-off and shutdown fears rattled Wall Street.

FLBR, which offers cost-efficient access to 71 Brazilian stocks, is up by 22% since we last covered it, but a shift in stance may now be warranted. The Brazilian macroeconomic backdrop is looking quite unsteady with weak GDP trends, steep inflation, high interest rates, tariff pressure, and adverse loan growth appetite. FLBR's dividend yield has declined to around 5% (5-year average is 7.7%), with payout cuts of Brazilian enterprises and potential tax reforms threatening future distributions.

I recommend holding assets tracking major Brazilian indices despite new US tariffs, given heightened uncertainty and market volatility. Trump's 50% tariff on all Brazilian products will significantly impact Brazil's export-dependent economy, especially in commodities like oil and iron ore.

I recommend holding the Franklin FTSE Brazil ETF due to improved momentum but caution over potential political volatility. President Lula's declining approval and potential trial of former President Bolsonaro could cause market instability. Despite strong performance, Brazil's macroeconomic issues and political risks warrant a cautious approach.

FLBR: Why Brazilian Equities Are A Strong Buy

Recommend holding Franklin FTSE Brazil ETF due to inflation exceeding targets and increasing complexity in Brazilian investments. The government's spending cut package fell short, raising skepticism about Brazil's public debt trajectory. The Brazilian stock market has reached extremely cheap levels, but with justification.