Even with the markets recent volatility, it is important to keep a long term focus and diversify your holdings outside the domestic issues. As we live longer in retirement, we need our money to last and do more. Yet, less than one third of retirement savings are in international funds. Even scarier is that only one in 10 investors has any sort of exposure to emerging markets. It is in these nations that portfolios can expect find the explosive growth needed to fund a long and comfortable retirement. The recent debt problems in Europe and substituent market drops have given investors a chance to add emerging markets to portfolio. One particular South American nation may just be the king of them all.
IN PICTURES: Learn To Invest In 10 Steps

BRIC with a Capital B
With its rich plethora of natural resources, a young increasingly wealthy demographic and conservative financial picture, Brazil has established itself as one of the planet's economic victors. After a turning point election in 2002, Brazil underwent a wave of pro-market reforms. This helped ensure the independence of its central bank, shrank its budget deficit and helped successfully develop the nation's vast natural resources.

As the rest of world's economies felt the weight of the credit crisis, Brazil faired much better. Gross Domestic Product for the nation contracted just 0.2% in 2009. This compares with a 2.4% contraction in the United States, a 4.1% reduction in the Euro zone, and 6.5% drop in Mexico. Brazil's Public debt hovers at just 43% of GDP, versus nearly 75% for the G20. Real wages have increased and unemployment has declined.

A Portfolio Must
The growth story in Brazil has the potential to be bigger than China's, and the recent market correction could be the time for investors to bounce. Brazil's Bovespa stock exchange is currently in negative territory for the year. The global sell-off has resulted in a loss of more than 8%. The broad-based iShares MSCI Brazil Index (NYSE:EWZ) is down about $17 from its 52-week high, and could be a great starting point for a portfolio addition. However, in wake of the nation's transformation, many of its individual companies trade as ADRs on U.S. exchanges. With wide choices, investors may be better suited in single equities.

A Few Picks
Feeding the nation's growing consumer base is job of Brazil Foods S.A. (NYSE:BRFS). Functioning similarly like Kraft (NYSE:KFT), the food producer has its hand in everything from frozen pizzas to poultry across South America. The BRFS exports its products to more than 100 countries. The company recently reported first-quarter sales of R$5.8 billion, an increase of 148% versus 2009 numbers.

While in the United States, there still is much debate over the health of the housing market, in Brazil, the growing middle class is buying homes. Gafisa (NYSE:GFA) is a home builder in the nation that operates across several different income levels. Shares of the company are trading the cheapest they have been in quite a while, with a forward P/E of 9 and PEG ratio of just 0.23.

The Brazilian steel industry is rebounding faster than developed markets because of the short-lived recession in nation. China's steady appetite for commodities and steel has also helped buoy the nations steel industry. Gerdau (NYSE:GGB) is one of the country's largest steel manufacturer and Vale (Nasdaq:VALE) is one of the world's largest iron ore miners. Together, these two stocks are great way to play the growth of the nation's commodity industry.

The Bottom Line
Investing internationally is important for long-term portfolio health. The recent market swings have opened up opportunities to add emerging market exposure and Brazil is a choice destination. Through the previous picks, as well as exchange traded funds like the Market Vectors Brazil Small-Cap ETF (NYSE:BRF), investors can tap into this growth. (Learn more about investing in Brazil, see: Investing In Brazil 101.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  2. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  5. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  6. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  7. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  8. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  9. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  10. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center