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The Bovespa Index is also known as Ibovespa and is the benchmark indicator of the Brazilian economy. The Portugese name for the index is the Índice Bovespa, and it tracks economic activity on the São Paulo B3 stock exchange – Brazil’s second-oldest stock exchange. The Bovespa index tracks the financial performance of a basket of around 60 different stocks on the B3.
Below you’ll find a brief history of the Bovespa Index, an outline of its rules for selection, and information as to how you can invest in it.
The Bovespa index began on 2nd January 1968 with a base level of 100 index points, and from that point onwards tracked the value of the stocks that have traded at least 80% of their volume on the B3 exchange.
Over time the index has risen and fallen sharply, but shown a good amount of growth over the past two decades. One particularly notable dip in value came in 2007-08 when the financial crisis hit, but the Bovespa index also saw large falls in the early 2000s and in 2016. It has usually recovered strongly, however, and the peak level at which the Bovespa index has closed stands at 119,528 on the 23rd January 2020.
There are a variety of criteria that companies must meet if their stocks are going to be tracked by the Bovespa index, and the index usually tracks in the region of 60 companies listed on the B3.
In order to be considered for the Bovespa index, companies must have been traded on the B3 exchange in the past 12 months (additionally over 80% of the shares they have traded in that time must have been traded on the exchange), have a trading share of stock higher than 0.1% of the B3 exchange’s total share flow, and have stocks included in a specific group of high value stocks.
When it comes to investments that track the performance of specific index funds, the best way to do it is to use Index ETFs. These are Exchange-Traded Funds that are set up in order to track indexes such as the Bovespa index as closely as possible. This allows investors a high level of diversification while at the same time still delivering a product that can be traded on exchange – unlike simply investing in an index fund.