If you want to invest in developing countries, the BRIC ETF might be the way to go. BRIC stands for Brazil, Russia,  India, and China. These countries are consistently among the fastest growing in the world. The developed world depends on these countries for their imports. Meanwhile, these countries rely on the more developed world in order to buy their exports. ETFs provide an easy an cost-effective way to invest in these economies. Investing in ETFS eliminates the guesswork involved in stock picking. For example, it might be very difficult to find good information about small companies in India. ETFs allow you to eliminate this guesswork while at the same time spreading your risk around by investing in a number of companies at the same time. You can also invest in the four countries individually, or you can in invest in all of them at the same time.


Brazil’s economy has a history of being resilient during economic downturns thanks to quick government interventions. Brazil’s economy has many things going for it. The government regulates the banking industry relatively heavily. It has also made very expensive ban loans which mean few people in that country are in debt. Large reserve requirements dissuade banks from making irresponsible loans. It is also making very large investments in infrastructure. You can invest in Brazil individually through  the iShares MSCI Brazil fund (EWZ), and the Market Vectos Brazil Small-Cal (BRF).


Russia’s economy has its hurdles to overcome. It has a history of being uncooperative with other economies. It is also seen as being too dependent on oil. Russia is often looking for new money, but when credit markets are tight, this money is difficult to come by. However, it keeps quite a bit of money in reserves, so its credit rating is strong. You can invest in Russia individually through  Market Vectors Russia (RSX).


India’s boom was attributed to large inflow of investments and cash. More than a third of this inflow came from abroad. However, such inflows have a record of plummeting with the economic climate is less favorable. The International Monetary Fund has declared that Indian companies are among the world’s most exposed because of their heavy borrowing. On the brighter side of things, financial corporations are not generally weighed down by toxic assets. The future sees increased fiscal spending on infrastructure and social programs. You can invest in India through PowerShares India (PIN), WisdomTree India Earnings (EPI), and iPath MSCI India ETN (INP).


China is actually an economic powerhouse and, as one of the largest buyers of U.S. debt, very important to the West. The Central Bank of China  has relaxed its monetary and insured sufficient liquidity, thereby  prioritizing the maintenance of a stable economy. It is also increasing its aid and lending, thereby increasing its influence abroad.  China still has its infrastructure issues however. You can invest in China through the iShares FTSE/Xinhua China 25 (FXI), Powershares Golden Dragon Halter USX China (PGJ), and SPDR s&P China (GXC).

Investing in All the BRICs

There are a variety of ETFs that invest in all the BRICs. Look at your options carefully, as the weights and breadths of the investments vary. Ways to play all the BRICS are iShares MSCI BRIC (BKF), and SPDR S&P BRIC 40 (BIK).

blog comments powered by Disqus