EWZ vs ILF

Key Takeaways

• EWZ offers concentrated single-country exposure to Brazil, while ILF diversifies across five Latin American markets, reducing country-specific risk.
• ILF is meaningfully cheaper at a 0.47% expense ratio versus EWZ at 0.59%, an advantage that compounds over long holding periods.
• Both funds are heavily weighted to financials, materials, and energy, but EWZ carries higher Brazil fiscal and political concentration risk than ILF's regional mix.
• EWZ is the larger and more liquid vehicle, making it a preferred tool for tactical, high-turnover Brazil exposure.
• ILF's Mexico, Chile, and Peru sleeve adds exposure to copper, banking, and consumer franchises that EWZ does not capture.
• Tickeron AI Verdict: ILF is favored for its lower cost, broader diversification, and more balanced risk profile relative to EWZ.

Introduction

Emerging-market investors frequently weigh single-country conviction against regional diversification, and the choice between the iShares MSCI Brazil ETF (EWZ) and the iShares Latin America 40 ETF (ILF) crystallizes that decision. These two exchange-traded funds (ETFs) do not compete directly so much as they represent alternative positioning along the same theme: exposure to Brazil's commodity-and-financials-driven economy. EWZ delivers pure-play Brazilian equities, while ILF blends Brazil with Mexico, Chile, Peru, and Colombia. Given Brazil's outsized weight in both funds, their performance is correlated, yet their structural differences in cost, diversification, and liquidity make this a meaningful ETF comparison for investors calibrating emerging-market risk.

iShares MSCI Brazil ETF (EWZ) Overview

EWZ is a passively managed ETF that tracks the MSCI Brazil 25/50 Index, a free-float-adjusted, market-capitalization-weighted benchmark covering large- and mid-cap Brazilian equities. The fund holds roughly 55 positions and is classified as non-diversified, reflecting the concentration inherent in Brazil's equity market. It carries an expense ratio of 0.59% and, as one of the largest single-country emerging-market ETFs, manages assets in the range of several billion dollars, providing deep liquidity and tight spreads.

Sector exposure is dominated by financials at approximately 36% of assets, followed by energy near 19%, basic materials around 13%, utilities near 13%, and industrials near 11%. Top holdings include Nu Holdings (NU), Vale (VALE), Itaú Unibanco (ITUB), Petrobras (PBR), Banco Bradesco (BBD), B3, and WEG. This composition ties EWZ closely to Brazilian interest rates, consumer credit, and global commodity cycles, particularly Chinese demand for iron ore.

iShares Latin America 40 ETF (ILF) Overview

ILF is a passively managed ETF that tracks the S&P Latin America 40 Index, composed of 40 of the largest and most liquid equities trading across five Latin American markets. The fund holds approximately 45 to 51 positions and is also non-diversified, with a lower expense ratio of 0.47%. While its asset base is smaller than EWZ's, ILF remains a liquid, widely used vehicle for regional Latin America exposure.

Geographically, Brazil represents roughly 59% of the fund, with Mexico near 26%, Chile around 7%, and smaller allocations to Peru and Colombia. Sector allocation features financials at about 35%, basic materials near 20%, energy near 14%, consumer staples around 9%, and industrials near 9%. Top holdings overlap meaningfully with EWZ—Nu Holdings, Vale, Itaú Unibanco, and Petrobras—but also include Mexican names such as Grupo México and Grupo Financiero Banorte, plus Credicorp (BAP) of Peru and América Móvil of Mexico. This mix broadens ILF's exposure beyond Brazil's domestic economy.

Industry and Thematic Backdrop

Both funds sit at the intersection of several macro forces shaping Latin American equities. Commodity prices—particularly iron ore, copper, and crude oil—remain central performance drivers, given the heavy materials and energy weightings in both portfolios. Monetary policy cycles in Brazil and Mexico influence the large financials sleeve, as lending margins and credit demand respond to interest-rate shifts. Meanwhile, China's economic trajectory continues to be a key external variable for exporters across the region.

Brazilian fiscal policy and political developments add a layer of single-country volatility that disproportionately affects EWZ. ILF partially buffers this risk through its Mexican, Chilean, and Peruvian holdings, which benefit from distinct economic cycles, copper exposure, and different regulatory environments. For investors evaluating relative positioning, the regional diversification embedded in ILF acts as a partial hedge against Brazil-specific drawdowns while retaining broad emerging-market commodity leverage.

Performance and Positioning Comparison

Over recent weeks and months, both funds have moved largely in tandem, reflecting Brazil's dominant share of each portfolio and the shared weight of financials and commodity producers. However, relative performance has been shaped by the currency, fiscal, and rate environment in Brazil, where EWZ's pure exposure has amplified both upswings and corrections. ILF's Mexico sleeve—anchored by miners, banks, and consumer franchises—has at times provided offsetting returns, modestly smoothing volatility.

From a risk standpoint, EWZ exhibits higher concentration and greater sensitivity to Brazilian politics and the real's exchange-rate moves, while ILF trades some of that single-country beta for lower cost and broader diversification. Fund performance has also been influenced by the earnings cycles of shared top holdings such as Nu Holdings, Vale, and Petrobras, which drive a substantial portion of returns in both vehicles. Investors seeking maximum Brazil beta may prefer EWZ, while those prioritizing cost efficiency and regional balance may find ILF's structure more resilient across market cycles.

AI Screener

Tickeron's AI Screener is an AI-powered stock and ETF discovery tool that helps traders and investors filter the market using technical patterns, fundamentals, trend analysis, volatility, and AI-driven signals. Users can scan thousands of securities with customizable filters, including industry, market capitalization, technical indicators, price patterns, and performance metrics. The screener helps identify trade ideas, trending names, breakout candidates, and emerging market opportunities far more efficiently than manual screening. Explore the AI Screener to refine your ETF comparison and uncover actionable setups in Latin American equities today.

Tickeron AI Verdict

Based on observable structural factors, Tickeron's AI would likely favor ILF over EWZ in the current environment. ILF offers a meaningfully lower expense ratio (0.47% versus 0.59%), a more balanced regional footprint spanning five markets, and comparable sector momentum through its financials, materials, and energy exposure. While EWZ provides superior liquidity and a purer vehicle for expressing Brazil-specific conviction, its single-country concentration introduces elevated fiscal and political risk that ILF partially diversifies away. For investors seeking broad Latin American exposure with greater cost efficiency and a more tempered risk profile, ILF presents the more favorable structural trade-off at present.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

Disclaimers and Limitations