I’ve been hot on Brazil for some time now, and the price of EWZ continues to sizzle. From our $35 entry point to today’s $57.28 close, those of you who bought EWZ hook, line and sinker are sitting on a 64% unrealized profit…not to mention the sweet 4.7% yield it’s delivering.

With $6.06 billion in assets, this large-cap value ETF has many admirers. I’m sure the newest small-cap Brazil-based ETF will be just as popular and profitable.

Just weeks old, trading volume on Market Vectors BRF zoomed from just 30,000 to 282,700 with $11.1 million in assets and an 18% gain since its May 14 inception.

The reason I’ll be keeping an eye on this one is mainly due to its broad, small-cap focus. Accounting for over half of the nation’s IPOs in 2006 and 2007, Brazil’s smallest stocks fell swiftly during the height of the global crisis and almost all newly listed companies fell below their offer price.

These depressed prices represent excellent value for investors who believe in Brazil’s long-term growth prospects…as I do.

Get this…Brazil just recently announced that it has enough money lying around that it would follow in other booming countries footsteps in setting up a sovereign-wealth fund, worth between $10 billion and $20 billion, to invest its excess cash.

Also, long considered a global power in agriculture and natural resources, Brazil has added a key ingredient that had eluded it: a currency with staying power (remember what that used to be like?). As a result, the greatest burst of prosperity the country has witnessed in three decades has been unleashed, attracting foreign investors by the score and providing a growth engine for a flagging global economy.

Finally, a little icing on the cake: Back on April 30, Standard & Poor’s upgraded Brazil’s debt to “investment grade” – making Brazil the last of the BRIC nations to have its creditworthiness win that coveted seal of approval.

Now, I don’t see BRF as a complement to EWZ, but as a possible replacement for it. My 2009 target price for BRF is $60, and we’re inching closer to that mark every day. As we know, small caps historically outperform large-caps coming out of a recession.

And, like here at home, Brazil struggled to pull itself through. It’s nowhere near the trouble the U.S. still wallows in, and signs of growth are abundant. As its economy continues to churn at record RPMs, those undervalued small-cap stocks that make up the BRF stand to blossom quite nicely.

Interestingly, just two stocks make up 50% of EWZ: Vale S.A. (NYSE: VALE), the world’s largest iron ore producer; and Petrobras (NYSE: PBR), an oil, gas and energy producer. Next come two major non-state owned banks, making up the next 11.5%. That’s nearly 60% of the ETF in four companies—a rarity in the ETF world.

BRF is comprised of 51 stocks with the following sector breakdown: Consumer Discretionary, 31.7%; Materials, 15.8%; Financials, 11.7%; Utilities, 10.7% and Industrials, 10.5%.

So, we’re looking at a broader piece of Brazil in BRF. I definitely have this small-cap ETF on my radar screen. I’ll let you know when it blips even louder.