Barclays Global Investors expects its exchange-traded funds business in Brazil to reach $1 billion to $2 billion in the next year.

The forecast follows the introduction of the first three BGI iShares ETFs for the Brazilian market last week (see story here.)

The iShares ETFs were the first ETFs approved by the Brazilian regulator, the Comissão de Valores Mobiliários, a process that BGI began planning three years ago. More ETF companies may now follow iShares' lead into Brazil, where hedge funds and institutional use of ETFs is expected to lead the adoption of ETFs by local investors.  

In most Latin American ETF markets, it has been institutions leading the way, and retail investor use of ETFs expected to be a much longer-term story.

Mexico and Chile are among the easiest markets in Latin America to introduce ETFs, and these are the markets where BGI's early Latin

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The three ETFs have initial portfolios totaling about (U.S.) $41 million in assets.

 

Barclays PLC launched three exchange-traded funds in Brazil on Dec. 2, the first ETFs from the world's biggest ETF manager for the Brazilian market. 

The Brazilian iShares tracks three indexes: 1) the Bovespa Index, which holds the 66 most-traded stocks on the main Brazilian stock exchange; 2) the BM&F Bovespa Mid-Large Cap Index, which holds 69 stocks representing the top 85% of the market capitalization on the Sao Paolo exchange (adjusted for liquidity); and 3) the BM&F Small Cap index, which holds 71 companies representing the bottom 15% of the exchange's market cap.

Brazil is one of Latin America's biggest fund markets, and the Bovespa's profile as a major global exchange, the largest in South America, has been raised in recent years. Barclays Global Investors has plans to significantly expand its ETF staff in its Sao Paolo

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