Emerging Markets: A Quick BRIC 101 Investor Guide (EWZ, RSX, INP, FXI, BKF, EEB)
Chris Aylott: Of the many buzzwords that get thrown around when discussing emerging markets, “BRIC” may be the most common. What is a BRIC, and why is it important?
BRIC is an acronym invented by a Goldman Sachs analyst a decade ago that stands for Brazil, Russia, India and China.
For the last decade, these countries have been among the fastest growing economies in the world, and they are the heart of most emerging market investments.
These four countries share several important traits:
- They have large, young and growing populations (Russia has just begun to grow again after two decades of population decline).
- They have vast natural resources, though China and India’s populations are so large that these two nations need even more resources than they have.
- They have an emerging middle class hungry for consumer goods.
- They have home-grown technology industries and social media providers.
While each country also has its own unique features and problems, these common traits put them in similar positions in the world economy.
How do you invest in the BRICs?
Because the BRICs are relatively well-established in the global markets, investors can get information on their companies, and many of them offer shares on the U.S. market through American Depository Receipts (ADRs).
The BRICs also offer some of the best known exchange traded funds (ETFs). The iShares MSCI BRIC Index Fund (NYSEARCA:BKF) and the Guggenheim BRIC ETF (NYSEARCA:EEB) are both popular, and beginning investors should take a closer look. There are also ETFs tracking national stock indexes:
- The iShares MSCI Brazil Index ETF (NYSEARCA:EWZ)
- The Russia Market Vectors ETF (NYSEARCA:RSX)
- The iPath MSCI India ETF (NYSEARCA:INP)
- The iShares FTSE/Xinhua China 25 Index ETF (NYSEARCA:FXI)
While many BRIC-based companies are becoming household names in America, it’s important to remember that these are still emerging markets. Exercise caution, and put in plenty of due diligence before you invest.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.