How to Invest in BRIC Mutual Funds

The economies in the BRIC countries-Brazil, Russia, India and China-are booming. So much so, in fact, that Goldman Sachs economist Dominic Wilson says they will be some of the world's most powerful economies by the middle of this century. Investing in BRIC mutual funds now is difficult, as your choices are limited and expensive, but as they become more popular, it will become easier and more affordable.

Things You'll Need

• Time to read prospectuses and talk to financial professionals
• Money to put in a high-risk investment
• A background on how mutual funds work
• A computer with a high-speed Internet connection
• An understanding of international economies, particularly Brazil, Russia, India and China

Instructions

1. Understand what you're getting into. Investing in the economies of foreign countries is complicated, so visit Morningstar, listed in Resources below, or other respected investment Web sites to learn as much as possible.

2. Study the innovator. Visit the site of Franklin Templeton, listed in Resources below, the company that launched the first U.S.-registered BRIC mutual fund. Since this is a new type of mutual fund, studying its brief history is invaluable.

3. Search for options. The number of financial and investment companies that offer BRIC mutual funds is small, but expanding quickly, just like the economies of those countries.

4. Get a prospectus. After finding an investment firm, request a prospectus online or to be sent via mail.

5. Read it very carefully. Because BRIC funds are hot, you may be levied very high sales charges or annual expenses. A prospectus lists all fees and risks you can expect.

6. Determine the amount of your investment. As this market develops, it will become a safer investment, but BRIC funds, and all mutual funds are risky. Keep this in mind while considering the amount of your investment.

7. Request and complete an application.

8. Invest through a broker or directly with the mutual fund.

Tips & Warnings

• For a balanced investment, keep your holdings of BRIC mutual funds at 3 percent to 5 percent of your portfolio.

• Hold on to BRIC mutual funds for five to 10 years.

• An alternate to risky BRIC mutual funds is to invest in no-load funds that include BRIC countries as well as other emerging economies.

• BRIC economies are going through growth spurts, which makes any investment in BRIC mutual funds very risky.

• Emerging-market stocks are notorious for big price swings, so be prepared for both booms and busts.

• The track record for BRIC funds is too short for any accurate long-term predictions.

Resources

• Visit the Franklin Templeton Investments Web site by following this link.
• Visit the Morningstar, Inc. site by clicking here.