- According to Goldman Sachs, Brazil, Russia, India and China will be among the world's six largest economies due their emerging markets, populations and natural resources.
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Exchange-traded funds offer investors the best strategy for focus on BRIC countries. There are two top exchange-traded funds to facilitate this type of investment surveillance. The first is the SPDR S&P BRIC 40, which tracks blue chip stocks. The second is the Claymore/BNY BRIC which holds stocks of companies trading in the United States on what are known as depositary receipts.
The Claymore emphasizes more of the Brazilian and Indian companies while the SPDR prefers China and Russia. -
Investors planning to diversity their portfolio using BRICs need to be aware of the inherent volatility of these markets. It would be prudent of any investor to check to see how many shares of any emerging markets fund are already owned prior to venturing any further into the BRIC mutual funds. Investors may find that their current holdings are more than sufficient to expose them to the level of risk they are committed to exposing themselves to.
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BRICs have become popular again because the economic growth of these countries is fast outstripping that of even the most developed of nations. This fact alone makes BRIC mutual funds particularly attractive to investors who have a stomach for investing in emerging markets.
BRIC mutual funds are account managed by investment professionals. The professional investor or portfolio manager buys bulk interest in the foreign assets and pays the client-investor a return based on the performance of the holdings. - As for benefits, BRIC mutual funds allow for relatively easy investing with the potential for high returns. Since a professional is managing the portfolio, they are responsible for the day-to-day analysis of the markets that will produce the highest returns possible.
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Completing transactions related to the acquisition and sale of assets may prove to be more challenging, thus, investors must be forewarned that many of the BRIC mutual funds hold assets outside of the four countries for which the fund is aptly named. Additionally, a BRIC mutual fund may not provide investors with the percentage share of a particular market that they may be seeking.
As with any investment, it is speculative by nature. Therefore, BRIC mutual funds have just as much potential for losing money as for gaining it. It is unlikely, however, that unrest in any one country will have a significant impact on the value of a BRIC mutual fund portfolio.
