The Significance Of BRIC Seems To Be Eroding

Includes: BIK, BKF, EEB
by: Roger Nusbaum

Barron's has a reference to a new emerging market acronym this weekend; MIST which stands for Mexico, Indonesia, South Korea and Turkey. The common link here apparently is a rise in consumer spending. iShares has ETFs for all these countries and Market Vectors also had an Indonesia fund.

Since BRIC was first coined there have been several emerging market acronyms (or the like) including CIVETS, N-11 and now MIST. BRIC is attributed to Jim O'Neil from Goldman Sachs and it was brilliant. Although I have written about these other catchy names I think it is time to close the book on the name gimmicks.
It is unclear that there is much value in investing in a fund, like the various fund that leverage the BRIC name, which arbitrarily lump countries together. CIVETS was someone's idea of the most promising countries at some point in time. I could not find who came up with the concept but HSBC actually launched a fund somewhere targeting those countries although I could not find it on Google Finance.

Perhaps the BRIC countries should have been lumped together when the term was created but the stories on the ground in these places seems to have diverged such that other than being all large emerging market countries the significance seems to be eroding. At some point the countries in questions decided to change it to BRICS to include South Africa which is a baffling outcome considering the original term is a catch phrase.

In past posts I've argued that even the term emerging markets no longer has any meaning.

My preference for foreign investing has always been to pick countries from the top down and then to pick whatever will hopefully be the best proxy for each country. Obviously best proxy will depend on the person making the decision and could include individual stocks, country funds or maybe some other sort of specialized ETF. It hopefully goes without saying that investing in gimmicks won't work out very well most of the time.