BRIC EFTs Now Being Put to the Test

By Tom Lydon

Photo: BRIC EFTs Now Being Put to the Test

The BRIC (Brazil, Russia, India, China) economies are some of the fastest-growing in the world, but which focused exchange traded fund (ETF) is better?

Once thought to be de-coupled from the rest of the world, BRIC ETFs hit the market with major investor interest, and although there’s a downtrend showing through right now, these funds are still useful in the long run for diversification and portfolio allocation, reports Jonathon Bernstein for ETFZone.

The ETFs are closely correlated to the U.S. benchmarks, however, their performance has nothing to do with this, so they are still a useful diversification tool. China is growing at around 10% per year, India is growing at 8-9%, Brazil and Russia 5-7%. These rates are not constant, and of course depend on healthy participation of Western economies, as well as the rest of the world.

Allocation by country is different in each fund, while China and Brazil dominate 65-85% in each, and India and Russia get honorable mentions, but scant exposure. Industry allocation is more similar as industrial, energy, telecommunications and financials at the forefront.

After the downturn, some of the BRIC countries will likely recover better than others. Some might be in for long-term damage recovery, while others should rebound nicely.

Either way, we use trends to identify what areas are moving, and for the time being, the trend in these funds is down along with the rest of the globe.

Click here to see detailed tables.