Investing in BRICs with ETFs

The BRIC investment theme — as in Brazil, Russia, India and China — has been an enormously popular topic in international investing circles since Goldman Sachs economist Jim O’Neill coined the acronym back in 2003. It’s hard to believe it’s been 6 years. The seminal pieces of Goldman’s BRICs research along with some other interesting papers are gathered here.

Once an investment theme gets its own acronym, it’s usually the kiss of death. But BRICs have been a rare exception. Despite the fact that these markets have been insanely volatile, and despite the fact that everyone and his uncle knew about them all along, BRIC still managed to shoot the lights out. You’d be hard pressed to find any global investing theme that has worked better in recent memory.

The numbers don’t lie. Over the past 5 years, MSCI’s BRIC index has risen a compound annualized 19%. MSCI’s plain vanilla emerging markets index returned 12% over the same stretch. EAFE and MSCI’s major European indexes were roughly flat, and the U.S. is bringing up the rear with an annualized loss of about 4% over those same five years. [All numbers via MSCIBarra.com]

None of this is to say that BRICs will continue to outperform. You’ll need to make that call on your own. But when something this powerful comes along, you at least need to take a closer look. Tom Lydon of ETFtrends.com, the ultimate ETF guru, has prepared an Ultimate Guide to BRIC ETFs that is a great resource for learning about the different investment options in these markets. Maybe you’ll find something on Tom’s list that you can buy…maybe you’ll find something you’d like to short. But you’d be crazy to ignore it.

Comments

[AndrewBaker:]

For anyone with at least a five year horizon, or ten or more being better, BRIC ETF are a good buy.

May 28 03:30 PM

[tc1:]

From reading on this and related topics of late, i gather that Brazil and India are an even better play than Russia going forward, and the FXI China etf may be outperformed by the EWT (Taiwan) and EWY (S.Korea) etfs.

Comments welcome by those more knowledgeable than myself.

May 29 01:10 PM