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As investors grow increasingly skeptical over the health and near term future of emerging markets, many are taking a closer look at a once favorite destination of Brazil. The country is now growing at a rate of just 2% (or less) a year, a huge decrease from the impressive 7.5% level that the nation saw just two years ago.

This sharp downturn in growth looks likely to put some pressure on the central bank to push rates even lower as a way to spark much needed growth. This could be especially true if inflation levels remain moderate, giving the central bank plenty of policy options in order to accomplish its objectives (see The Comprehensive Guide to Brazil ETFs).

Beyond monetary stimulus, the country could also see a wave of spending thanks to two important events coming up in the next four years; the World Cup in 2014 and the 2016 Summer Olympics in Rio de Janeiro. Both of these events could greatly add to infrastructure expenditures and demand, creating a boon for the nation’s chronically decrepit road and rail network as well as the main firms that operate in this segment.

In fact, according to the Miami Herald, the nation will be pouring cash in to its airport system in order to handle the influx of visitors, more hotels to house the spectators, and a far reaching transportation network to move everyone around more efficiently. Some estimates put the cost at $14.4 billion including $11.6 billion in public investment, a situation that could be a nice stimulus for the infrastructure industry in the country.

Yet even these figures could be grossly understated, especially when comparing them to previous Olympics. According to a report by the Motley Fool, cost overruns in the last four Olympic games averaged 157% including a 375% overrun for London on the high end and ‘only’ a 46% overrun for Beijing (read Five Emerging Market Infrastructure ETFs for the Coming Boom).

This suggests that the spending just for the Olympics, not even counting World Cup programs or the rest of the infrastructure spending that will be necessary for the country, could be far more than what many are projecting. After all, Brazil will likely be using the upcoming events to showcase to the world that the country has ‘made it’—much like China in 2008—and since Brazil ranks in the bottom half of the world for overall infrastructure quality (behind nations like Ethiopia and Syria) spending will necessarily have to surge in the coming years.

In order to jumpstart this spending, it appears as if Brazil is already handing over some management of its roads and rails to independent sources, suggesting that the government is willing to work with the private sector on these issues. Recent reports suggested that $65 billion in new measures would be undertaken in the sector including having the government sell thousands of miles of highways and railways to private investors for them to operate (hopefully) more efficiently (read Three Overlooked Emerging Market ETFs).

With these trends and the prospect for more stimulus and spending on infrastructure in the coming months and years, it could still be an interesting time to target the sector via an exchange-traded fund. While investors could make a play on the broad market, the more targeted EGShares INDXX Brazil Infrastructure Index Fund (BRXX - ETF report) seems like the best way to play the trend.

Although the fund has crushed broad Brazil ETFs like (EWZ - ETF report) so far this year (adding about 8.8% compared to a nearly 5% loss for EWZ), the product remains well below its 52 week high. In fact, the fund still has a long way to go to get back up that level, suggesting that there are still decent gains to be had in this slice of the market.

Furthermore, due to the diversified nature of the ETF, the product looks to be a lower risk play on the Brazilian infrastructure market as risks will be spread out across 30 different firms. Also, no one company makes up more than 7% of the assets, while industry exposure is extremely spread out, as no more than 15% is in any single industry (see Forget Petrobras with These Brazil ETFs).

While the expense ratio is somewhat high at 85 basis points and the trading volume isn’t the highest at about 30,000 shares a day, the product does have $75 million in AUM suggesting that it will be around for a while.

Lastly, the impressive yield on the product, at roughly 4.2%, and the trailing P/E ratio of just 11.2, suggest that it is also a value fund, making it a potentially low risk way to play what looks to be a very real, and likely to happen, spending trend in the nation. After all, if Brazil wants to keep growing it will have to work its way up the infrastructure rankings and if it the nation wants to be considered a true economic power—like China—it must be able to showcase to the world that it is capable of getting things done (read Latin America ETFs: Beyond Brazil).

The upcoming World Cup and Olympics will undoubtedly be real tests for the nation and it isn’t unreasonable to assume that Brazil will throw money at the problem in order to prove itself on the world stage. This situation makes BRXX a very interesting pick for the next several years, suggesting that this could be the way to play the region in the near term.

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Follow @Eric Dutram on Twitter

Author is long BRXX.

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