First Trust Brazil AlphaDEX Fund (FBZ)

WHEATON, Ill.--(BUSINESS WIRE)--First Trust Advisors L.P. (“FTA”) announced today the approval of the liquidation of First Trust Brazil AlphaDEX® Fund (Nasdaq: FBZ), a series of First Trust Exchange-Traded AlphaDEX® Fund II (the “Fund”). Based upon the recommendation of FTA, the investment advisor of the Fund, the Board of Trustees of First Trust Exchange-Traded AlphaDEX® Fund II determined that it was in the best interests of the Fund to liquidate the Fund. Accordingly, the Board of Trustees a.

The First Trust Brazil AlphaDEX Fund, a little-known ETF, has outperformed global stocks and emerging markets quite handsomely this year. FBZ employs an enhanced methodology which assigns priority to certain growth and value screeners. On further scrutiny, we find quite a few flaws in this product, and feel that the largest Brazilian ETF- EWZ has better qualities.

Emerging markets continued to expand at a solid pace midway into the first quarter of 2024, supported by broad-based expansion across both manufacturing and service sectors.

China and Hong Kong markets had a humbling 2023 with equities down more than 10%. Beijing has also begun stepping up tourism and travel promotions, granting visa-free entry to 11 countries, with Singapore and Thailand the latest to be included.

The last time I wrote about high-yield ETFs was in early July, when my focus was dividend ETFs whose yields were higher than the iShares Select Dividend ETF (NASDAQ: DVY ). At the time, that yield was 3.71%.

In the fog of domestic political and fiscal uncertainty, investors may still find Brazil equities poised to benefit from structural growth trends within their industries. We believe the tide is turning for Brazil equities, and high-quality companies could benefit the most.

The MSCI Latin America Index has performed better than the MSCI Emerging Market Index cumulatively over the past 5 and 7 years as well as over longer time periods, buoyed by its natural resource companies. The region is well placed to take advantage of the opportunities created by the renewable energy revolution with 54% of global lithium reserves concentrated there.

Brazilian assets may be hit by fresh volatility on Monday after supporters of former President Jair Bolsonaro stormed key government buildings, echoing the U.S. Jan. 6 insurrection of 2021, analysts said.

Water scarcity in Latin America is likely to intensify supply chain and operational disruptions, regulatory risks, and economic losses for businesses during the next five years. In Brazil, hydropower accounts for 65% of the electricity matrix.

Central banks across emerging markets have reacted to elevated inflation by significantly tightening monetary policy, in some cases, well ahead of the U.S. Federal Reserve and the European Central Bank. After largely synchronized rate-hiking cycles across EM, monetary policies could once again begin to diverge among individual countries.

Wall Street was downbeat last week with the S&P 500 losing about 3.4%, the Dow Jones shedding 1.4%, the Nasdaq retreating 5.7%, and the Russell 2000 falling about 2.6%.

Brazil's Bovespa stock index has gained 10% this year, while the S&P 500 is down 25%.

The first-round outcome is likely to buoy Bolsonaro, whose showing was better than polling had indicated. Lula has not specified how he would reduce Brazil's large current structural fiscal deficit or contain the expansion in public debt (78% of GDP).

Luiz Inácio Lula da Silva won the first-round against incumbent Jair Bolsonaro's - neither candidate captured more than 50% of the vote, so there will be a runoff on October 30. Bolsonaro has improved his chances for a second term, although the odds remain strongly in favor of Lula.

Economies of Latin America and Caribbean have continued their strong post-pandemic rebound, but the winds are shifting as global financial conditions are tightening and commodity prices are reversing their upward trend, while inflationary pressures persist. The reopening of contact-intensive sectors, especially hospitality and travel, the unwinding of pandemic pent-up demand, and still favorable external financial conditions supported a solid expansion in the first half of the year, allowing services to catch up with manufacturing, and employment to reach pre-pandemic levels.

The Central Bank of Brazil has embarked on a series of shock-and-awe rate hikes in order to not fall further behind. Following its last meeting, Banxico said again that it expected inflation to be transitory, carefully echoing the Fed's Powell. Due to the magnitude of price shocks, and their spread across the economy, Banxico said it deemed it necessary to raise its policy rate.