Welcome to our series of Articles on BRIC ETFs (Brazil, Russia, India and China Exchange Traded Funds) discussing why they should be an important addition to your investment portfolio, as well as weighing their pros and cons.

As the U.S. investors have traditionally favored home grown, in bound investments, the Global markets are changing this trend more and more. We are now observing more interdependent economies where one can't grow without another.

During 2003 until 2007, the emerging economies' growth was staggering and funds investing in these zones managed to deliver over 70% annual returns. Attracted to such lucrative gains, more investors are considering to add emerging market equity to their portfolios. The simple way to do that today is to invest in ETFs focusing on the regions. These ETFs have opened a gateway to invest in emerging economies without actually leaving the US domain. Traded on US exchanges, ETFs represent portfolios of equity pooled together and managed by a professional investment managers.

The main emerging economies today are considered Brazil, Russia, India, and China, or simply BRIC. These four countries are among the biggest and fastest growing markets today. Mexico, South Korea and Singapore are comparable to BRICs, but their economies are considered already more developed.

The BRIC acronym was introduced by Jim O'Neill of Goldman Sachs in 2001. Analysts at Goldman Sachs published an opinion that these economies combined could become the four most dominant economies by the year 2050. The BRIC countries possess over 25% of the World's dry land, 40% of the World's population, and produce a combined 15 trillion dollars of GDP (PPP). On June 16, 2009, the leaders of the BRIC countries held their first summit in Yekaterinburg (Russia), and issued a declaration calling for establishment of a multipolar world order.

In this post crisis era, investor trends are leaning toward pursuit of higher returns, diversification and spreading risk exposure.  ETFs have made this relatively easy without the personal investor having to make 'guesses' as to where to invest their dollars. With volume of 50-70 mln shares /day EEM, the main emerging markets ETF tracking the MSCI Emerging Markets Index, is already among the 5 most traded ETFs on the market.

In the days to come we will be examining the BRIC - Brazilian, Russian, Indian and Chinese - economies and ETFs that provide you the opportunity to take advantage of the extreme growth that these economies provide.  See you in the next 24.

 

 

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