The deal calls for a supply of nearly 2.5 trillion cubic feet of gas per year via two potential routes originating from Siberia. The deal focuses on Central Asian countries and Russia as suppliers of natural gas, reports Edward Wong for The Wall Street Journal.

Gazprom, Russia’s state-run gas supplier and China National Petroleum Corp., China’s largest oil and gas supplier, have not yet worked out pricing details. (Read about the four things going for Russia).

A pipeline will run along the bottom of the Baltic Sea, driving a political wedge between Eastern and Western Europe. Central and Eastern European leaders fear the pipeline could usher in another round of domination by Russia through the use of gas, reports Andrew E. Kramer for The Wall Street Journal.

Russian gas has already been routed through Eastern Europe to Western Europe services. The new pipeline will give Russia a direct supply line to the west, enabling it to play “pipeline politics” with its eastern neighbors.

Read on for more stories about Russia, China or natural gas.

• Market Vectors Russia (NYSEArca: RSX): up 137.7% year-to-date; Gazprom 7.1%; RSX is also 43% energy

• iShares MSCI BRIC (NYSEArca: BKF): up 83.8%year-to-date; Gazprom is 4.1%

• First Trust ISE Revere Natural Gas (NYSEArca: FCG): up 52% year-to-date

• PowerShares Golden Dragon Halter USX China (NYSEArca: PGJ): up 63.2% year-to-date; China National Petroleum is 4.7%

Brazil’s economy has already been humming along, but two major sporting events could just be the icing on the cake: Rio de Janeiro has been tapped to host the 2016 Summer Olympics and Brazil will also host the 2014 World Cup soccer championship.

Other points in favor of the growing country’s economy, according to Charles Kraul for The Los Angeles Times:

• The International Monetary Fund (IMF) predicts that Brazil will outperform Mexico in 2009
• Consumer spending in Brazil is a big part of the country’s success; government incentives have also helped
• The government mandates that subsidized loan rates on homes and appliances be underwritten by state-owned lenders
• Public sector jobs have been added and welfare payments have been increased by 30%
• Brazilian interest rates are at 8.5%, the lowest they’ve been in history in real terms

There are several ways to play Brazil’s growth story with ETFs. The most direct is the single-country fund, iShares MSCI Brazil (NYSEArca: EWZ). It’s up 90.1% year-to-date. The fund has its heaviest weightings in materials and financials, which make up more than 50% of the fund. The materials sector could especially benefit as Rio builds the necessary buildings and stadiums to host the Olympics.

Another play is the Market Vectors Brazil Small-Cap (NYSEArca: BRF), which is up 12.7% in the last month. Small-caps tend to do well in a recovery, and this fund also has heavy weightings in consumer discretionary, industrials and materials – all areas that could benefit while Rio builds up and starts selling Olympics-related products.

The Brazilian real is also on what many analysts say is a sustained uptrend. This year so far, it’s the world’s second-best performing currency and it’s on track to rally for an eighth consecutive month, report Fabio Alves and Paulo Winterstein for Bloomberg. Next year, Brazil’s IPOs could double as the stock market continues to rally. One analyst believes that the real will rally to 1.80 per dollar by the end of this year. WisdomTree Dreyfus Brazilian Real (NYSEArca: BZF) is up 28.7% year-to-date.

For more diversified exposure, both iShares MSCI Bric (NYSEArca: BKF) and Claymore/BNY BRIC (NYSEArca: EEB) have heavy weightings in Brazil, along with exposure to the other four BRIC countries (India, Russia and China). They’re up 64.4% and 64.2% year-to-date, respectively.

For more stories about Brazil, visit our Brazil ETF category.

Traditionally, financial planners and advisors have recommended that one use their age as a benchmark to gauge how much risk should be in their portfolios.  However, Jan Alexander of Forbes states that times have changed and the rules of diversification and risk-taking have followed suit.

In order to mitigate some risks and maximize the performance of a portfolio, she offers several helpful strategies:

• Do what the Ivy League School Endowments do.  Stay diversified by allocating 15%-30% of a portfolio to the following five categories: U.S. stocks, foreign stocks, bonds, commodities and real estate investment trusts (REITs).

• Use ETFs. They can help you accomplish your goals of diversification. They also offer low costs, transparency, tax efficiency and intraday trading ability.

• The dividend strategy. Choose stocks and ETFs that pay dividends.  The reason behind this is that dividends don’t fluctuate like earnings do and it enables one to more accurately forecast the performance of a portfolio.

• Look at emerging markets. Many investors have already sought out Brazil, Russia, China and India, known as the BRIC nations, because of  their economic growth and prosperity.  A good way to access the BRICs is through the use of the iShares MSCI BRIC Index (NYSEArca: BKF), which is up 67.5% year-to-date.

• Check out short-term bonds. Aas the economy recovers, interest rates will increase and the value of a bond purchased today will lose value.  A good way to do this is through the iShares Barclays 1-3 Year Treasury Bond (NYSEArca: SHY), which is up 0.4% year-to-date and has a yield of 2.85%.

• Consider alternative assets, such as commodities and currencies. As emerging markets continue to prosper, raw materials and resources will continue to be in demand. Alternative asset classes are an essential part of a well-balanced portfolio.  A good way to grab exposure to the broad based commodity markets is through the iShares GSCI Commodity-Indexed Trust (NYSEArca: GSG), which is up 0.3% year-to-date.

In addition to considering these strategies, the most important strategy you can use is one that gets you into the markets in time for any potential long-term uptrend and has you out with a stop loss to protect yourself on the downside. You can read more about the strategy we use in The ETF Trend Following Playbook.

For more stories on strategy, visit our trend following category.

Kevin Grewal contributed to this article.

India’s economy is forecast to see “definite signs of recovery” in the second half of the current fiscal year, reports The Economic Times. Growth is predicted to be in the 6% to 6.5% range. But there are a number of investors who want to expand their horizons beyond the BRIC countries.

While BRIC countries have been growing and moving, the expansion of other developing nations is widening the choices investors have. For instance, Vietnam, Thailand and Turkey have all gone through growth that is every bit as significant, explains Don Dion for TheStreet.

While the idea of Vietnam or South Korea may appear refreshing if you’re looking for some fresh blood for your portfolio, it’s key to remember that emerging markets entail risk. The best thing to do is watch on the sidelines for the moving averages, then get in slowly. If you enter with a discipline and a sell point, you’ll check your emotions at the door.

As Don Dion for The Street explains, these funds can be volatile, so a small asset allocation to these funds is appropriate if you plan to take a buy-and-hold approach.

The consideration that goes into single-country ETFs is that as an investor, you are subject to politics, social traumas and reforms, and of course, concentration in a particular sector. This re-iterates the need for every investor to brush up and do some research before going in.

A sample of BRIC ETFs, and a couple alternatives:

• iShares MSCI BRIC (NYSEArca: BKF): up 66.9% year-to-date
• Claymore/BNY BRIC (NYSEArca: EEB): up 66.1% year-to-date
• Market Vectors Russia (NYSEArca: RSX): up 104.3% year-to-date
• iShares MSCI South Korea (NYSEArca: EWY): up 67.3% year-to-date
• Market Vectors Vietnam (NYSEArca: VNM): up 10% since Aug. 14 inception
• iShares MSCI Turkey (NYSEArca: TUR): up 84.3% year-to-date
• iShares MSCI Thailand (NYSEArca: THD): up 73.6% year-to-date

For more stories about BRIC ETFs, visit our BRIC category.

Leaders of BRIC countries (Brazil, Russia, India and China) are gathering for their first official summit in Yekaterinburg, Russia today to discuss long-term plans, according to the Economist. Member nations may coordinate in an effort to find an alternative to the dollar as a global currency and expand bilateral trade.

Analysts say BRIC countries are stepping up cooperation in an attempt to reposition themselves in the international arena, as stated in ChinaView. The recent financial crisis has also been a trigger in convincing these countries of the need to establish a new international political and economic order.

One of their main concerns is that Western governments should better supervise their countries’ financial capital and enhance risk warnings and disclosure in financial services. BRIC members will also discuss future ways of handling financial crises and less reliance on the U.S. dollar.

BRIC leaders will establish a relationship of mutual cooperation and common development in emerging market economies. BRIC countries may pool resources into common development interests. They could supplement each other in the fields of finance, energy, services, technology, agriculture, environmental protection and food safety, along with multilateral trade talks at the WTO.

iShares MSCI BRIC (BKF): up 51.0% year-to-date

Claymore/BNY BRIC (EEB): up 49.5% year-to-date

SPDR S&P BRIC 40 (BIK): up 50.5% year-to-date

For more stories on BRIC countries, visist our BRICs category.

Max Chen contributed to this article.

For full disclosure, Tom Lydon’s clients own shares of EEB.

It is clear that the emerging market is recovering faster than developed ones, according to ETF Grind. While developed markets are spurred by consumption, emerging markets are driven by investments. ETF Grind provides some funds that an investor may peruse so as to capitalize on the emerging markets over the next few years.

We should note, too, that there are many other ETFs that can provide similar exposure as the world decouples – this is merely a sampling:

• First Trust ISE Glb Engineering and Construction (FLM): up 12.2% year-to-date. The FLM  includes firms that specialize in designing and building infrastructure products. It also includes big-margin engineering and design firms, and focus less on materials and equipment.
• iShares MSCI BRIC Index (BKF): up 53.4% year-to-date. Emerging market funds often include countries that may not decouple as easily, such as South Korea, Mexico and Poland. But BKF provides exposure to the four BRICs emerging markets.
• PowerShares Emerging Markets Infrastructure (PXR): up 55% year-to-date. PXR it invests almost exclusively in firms that build infrastructure, and not in companies that operate and maintain infrastructure. The fund includes emerging market leaders and a few Western companies.
• Claymore/Delta Global Shipping (SEA): up 32.7% year-to-date. SEA invests in companies within the global shipping industry.
• PowerShares DB Commodity Index Tracking (DBC): up 12.7% year-to-date. DBC invests in the six most traded commodities: crude oil, heating oil, aluminum, wheat, gold, and corn.
• iShares S&P Global Materials (MXI): up 30.5% year-to-date. MXI tracks globally active firms that deal in materials. The fund is heavily weighted toward firms situated in developed markets, but they are international conglomerates with operations in emerging markets.
• Emerging Global Shares DJEM Energy Titans (EEO): This brand new fund holds 40 energy firms in emerging markets.  It is weighted toward Russian companies, which make up around one-third of the holdings.
• CurrencyShares Australian Dollar Trust (FXA): up 15% year-to-date. The Australian Dollar is a true “commodity currency” since its value is dependent the country’s natural resource exports.
• Market Vectors Agribusiness ETF (MOO): up 36.2% year-to-date. MOO invests in international agribusinesses.
• WisdomTree Dreyfus Emerging Currency (CEW): up 0.4% in the last week. CEW is new on the scene. It invests in a range of emerging market currencies that could appreciate against the U.S. dollar. It includes currencies such as the Chinese Yuan, Indian Rupee, Brazilian Real and South African Rand.

Emerging markets do have a higher risk profile than those of established foreign and U.S. markets, writes Jim Lowell for MarketWatch. But high inflows into emerging market ETFs warrants another look into this potentially lucrative area. Lowell provides the following areas of interest in the emerging markets:

Brazil. It is a viable and diversified economy that has also has good ties to the global economy.

• iShares MSCI Brazil Index (EWZ): up 64% year-to-date

South Korea and Taiwan can be traded depending on the technology sector.

• iShares MSCI South Korea (EWY): up 33.8% year-to-date
• iShares MSCI Taiwan Index (EWT): up 50.2% year-to-date

India moves along side with the global economy and China is an economic powerhouse in the global stage.

• PowerShares India (PIN): up 57.8% year-to-date
• iShares FTSE/Xinhua China 25 Index (FXI): up 35.9% year-to-date

In Emerging Europe, Russia could be played in relation to the price of oil.

• Market Vectors Russia ETF (RSX): up 97% year-to-date

Israel has strong industries in technology, biotech, and defense.

• iShares MSCI Israel Cap Invest Mkt Index (EIS): up 40.1% year-to-date

South Africa is noted for its metals and mining, or gold industry.

• iShares MSCI South Africa Index (EZA): up 27.6% year-to-date

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

For full disclosure, some of Tom Lydon’s clients own shares of MOO.

Max Chen contributed to this article.

However, recent weeks have seen emerging economies – especially the BRICs – awakening from their slumber and it’s time to consider new opportunities in these areas and how they may benefit us.

The theory of decoupling, which is the ability for an economy to grow on its own without assistance from other countries, has been laid to rest for the time being. The United States depends on these countries for imports and they’re dependent on us to continue to buy the materials they produce.

Now that BRICs have surged above their 200-day moving averages, it’s time to revisit them, see what’s been happening, where they’ve been and where they’re going from here.

ETFs have made it easier and more cost effective than ever for investors to gain exposure to the emerging markets, mostly by eliminating the guesswork of stock picking. Although researching large companies is not a daunting task, getting information about a smaller company in India might yield few results. Enter an emerging-market fund, where the legwork not only has been done for you, but you can invest in dozens of companies in one swoop, spreading your risk around.

Also numerous choices exist among ETFs. You can focus on a single country, such as Brazil, or you can just buy one fund that gives you exposure to all four BRICs.

BRAZIL

Brazil managed to ride out the economic downturn better than most of its other BRIC brethren, thanks to a host of government policies and actions taken as the crisis worsened. Even things generally seen as “bad” by some wound up helping the country in the long run, including:

• The heavy influence of the government in the financial sector.  In fact, retail bank giant Banco de Brasil, the nation’s largest mortgage lender, Caixa Economica , and BNDES, a big development bank that feeds credit to favored companies are all controlled by the government. While the rest of the world is figuring out how to get a handle on banks, Brazil has been doing it all along.
  
• Hugely expensive bank loans, meaning fewer people in debt.
  
• Huge reserve requirements and taxes on funding that push up the price of loans discouraged private banks from taking wild risks and jumping on the bandwagon that some of its peers in Europe and the United States did.
• Public-sector debt is below 40% of GDP, previously a problem in the nation.
• Foreign currency borrowings have been exchanged for the Brazilian real (their currency) dominated ones, so fluctuations in the real will not hinder the government’s balance sheet; Brazil has actually built up a reserve of about $200 billion to defend its currency.
• The economic crisis isn’t pushing up inflation, which has been an ongoing problem in the nation.  This has enabled the central bank to cut interest rates.

Latin American countries have been undergoing large infrastructure programs and they are likely to continue after the global recession has abated. The government’s growth acceleration program will continue into 2010, and it includes $231 billion for social, transport infrastructure and energy projects. In the second quarter of 2008, civil engineering progressed 10% higher than for the same quarter in 2007. A National Plan for Logistics and Transportation will also continue into 2023, including a budget of $79 billion.

A series of other factors that favor the economy include:

• Seasons. The Brazilian Bovespa stock index has a seasonal rhythm and the peaks tend to lie between the end of October and end of May. It is calculated that the average gain per period was around 16.4%.
• Trends. The intermediate trend is up with the MSCI index above its long-term trend line, the 200-day moving average.
• Fundamentals. Brazil is still a major producer of copper, crude oil, gold, silver, iron ore and coal. All of these commodities are still in demand and that demand is on the rise.
• Performance. As of May 27, Brazil’s index, the Bovespa, is up 28.8% year-to-date; the S&P 500 by comparison is up 0.8%.
• Optimism. Brazil’s government has gleefully estimated a 2% growth for GDP this year.

Ways to Play Brazil

• iShares MSCI Brazil (EWZ)
• Market Vectors Brazil Small-Cap (BRF)

RUSSIA

Of all the BRICs, Russia might have the most formidable challenges to overcome. First, Russia has a long and varied history of not “playing nice” with other economies, which has kept this rapidly growing economy from truly being all it can be.

Second, Russia’s economy has been seen as far too dependent on oil. Oil’s record-setting run benefited the economy enormously and left it with vast reserves of cash, but as soon as the bubble burst, Russia found itself without other sectors to lean on in bad times and its reserves are dwindling.

Finance minister Aleksei L. Kudrin has assured that the government is not in desperate need of financing, but is open to holding a road show in allowing foreign investors to get acquainted with Russian finances.

Foreign borrowing is seen as a way to help the economy by determining a benchmark rate for loans to corporations that are borrowing from Western banks.

One question, though: with credit markets so tight, is anyone actually going to loan money to Russia?

Due to its $385 billion in reserves, the world’s third largest reserve fund, Russia’s credit rating is still strong and it could even draw down its reserves without having to borrow from abroad. In 2010, the government may borrow $5 billion to test things out.

Under Secretary for Political Affairs William J. Burns noted in a recent speech that the relationship between Russia and the United States has five major points that need to be addressed:

• Finish a legally binding treaty on the reduction and limitation of strategic offensive arms
• Reduce the threat of nuclear weapon proliferation to unscrupulous regimes or terrorist groups, and safeguard the peaceful use of nuclear technology
• Help resolve conflicts in areas such as Pakistan, Afghanistan and the Middle East, and protect the sovereignty of independent states
• Ease the international financial crisis, expand Russian-American economic ties and include Russia into global economic institutions
• Commit to a way to help lessen or stop the further degradation of the environment

Ways to Play Russia

• Market Vectors Russia (RSX)

INDIA

During the slowdown, India’s construction came to a grinding halt, the luxury art market slowed and even the most educated of its population were having trouble finding employment.

During the boom years, India’s growth was attributed to large inflows of cash and investments, around 39% of GDP in 2008, with more than a third coming in from abroad. In the last 3 months of last year, foreign loan and direct investment plummeted almost a third.

The International Monetary Fund (IMF) has reported that Indian companies are among the world’s most exposed as a result of heavy borrowing. On the other hand, financial corporations in India weren’t weighed down by toxic assets, which wound up insulating them somewhat from the full impact of the global recession.

In the fourth quarter of 2008, the economy grew 5.3%, the slowest rate in five years. The government predicts a 6% growth this year while the IMF projects a 4.5% growth. There will be increased fiscal spending on infrastructure and social programs, and the Central Bank has reduced its benchmark interest rates.

A recent election, however, could reverse the country’s course. The day the Congress Party won the elections, the stock market shot up a whopping 17%. No wonder they were dancing in the streets. The victory raised hopes of a revival in foreign direct investment and economic growth, as well as tax reform and significant infrastructure spending.

Manmohan Singh’s win has given hope to a half a billion Indians that poverty isn’t a way of life.

Ways to Play India

• PowerShares India (PIN)
• WisdomTree India Earnings (EPI)
• iPath MSCI India ETN (INP)
  

CHINA

China’s economy, while still considered “emerging,” is considered one of the world’s economic superpowers. It’s the second largest in the world, and as one of largest buyers of U.S. debt, the relationship we share is a significant one.

Many economists believe that China’s economy will be the fastest-growing one in 2009. While the country suffered in the economic downturn and saw massive job losses, it also forcefully reacted to the downward pressure with $580 billion stimulus spending package that by many accounts is working.

China’s Central Bank also stepped in and prioritized the maintenance of stable economic growth by relaxing monetary policies and ensuring sufficient liquidity. The bank also kept  the yuan stable at a balanced level with a more flexible exchange rate.

In the meantime, China is trying to increase its influence with more overseas aid and loans, and top officials are setting up the country as the world’s next top economic power. There have been talks of a “Beijing Consensus” that might displace the Washington Consensus, which is a set of ten specific economic policy prescriptions that lays out how developing countries should manage their own economies.

While China is growing and powerful, there are still some hindrances to its growth: energy is insufficient to run at fully-installed industrial capacity; the transport system isn’t efficient enough to move mass quantities of critical items such as coal; the communications system isn’t able to meet the needs of a population as large as China’s.

One facet of China’s economy that might pay off in the long run is that consumer spending only makes up 35% of China’s GDP. The culture of thrift in China has caused massive amounts of household savings. But tax cuts and the government’s focus on infrastructure projects aims to help households. There is also a health insurance plan that would be provided to hundreds of millions more people over the next couple of years.

Ways to Play China

• iShares FTSE/Xinhua China 25 (FXI)
• PowerShares Golden Dragon Halter USX China (PGJ)
• SPDR S&P China (GXC)
• Claymore/AlphaShares China Small Cap (HAO)
  

How to Choose the Best ETF for You

If you are hungry for exposure to the BRICs and other emerging markets, ETFs can give it to you in a variety of ways, including two of the most common:

• Target a specific emerging market with a single-country fund, such as any of the ones listed above, which can potentially deliver higher volatility but greater rewards when they do well; or…

• You can choose a region or class of emerging markets with a broad-based fund, which spreads the risk and volatility over several emerging-market countries

As you decide which option works best for you, decide what your comfort level is, what areas are most interesting to you and how much risk you would like to take. It’s also important to watch the trend lines and look for those areas that are moving.

When you’re looking at a broad BRIC fund, it’s important to look at the allocations. None of them have an equal weighting across all four countries. In fact, most of them allocate at least one-third to one country, while the rest of the countries are spread out among the remaining two-thirds.

Ways to Play the BRICs

• iShares MSCI BRIC (BKF): Brazil, 27.4%; China, 23.5%; India, 13.9%; Hong Kong, 12.9% and Russia, 11.9%
• Claymore/BNY BRIC (EEB): Brazil, 52.8%; China, 18.3%; Hong Kong, 15%; India, 9.2% and Russia, 3.6%
• SPDR S&P BRIC 40 (BIK): China, 31.6%; Brazil, 23.9%; Russia, 23.2%; Hong Kong, 13.7% and India 6.2%
• First Trust ISE Chindia (FNI): China, 40.7%; India, 35.6%; Hong Kong, 13.6%

For full disclosure, some of Tom Lydon’s clients own shares of GXC and EEB.

ETFs are becoming a popular investment tool for investors to gain exposure to emerging markets by removing the onerous task of picking individual stocks, writes Tom Lydon for Stocks, Futures, and Options (SFO) Magazine.

This nifty tool allows for exposure to markets like the BRIC countries with ETFs such as Claymore/BNY BRIC (EEB), SPDR S&P BRIC 40 (BIK), or iShares MSCI BRIC (BKF). An investor may also focus on the individual countries which include:

• Brazil, iShares MSCI Brazil (EWZ), has a strong economy that can endure the global downturn. It also has a rising middle and has a stable political system. But, Brazil heavily relies on commodities which handicapped them last year when commodities plunged.
• Market Vectors Russia (RSX), is known for its reliance on oil and government corruption. This market is rather volatile but the undaunted investor would see that the country has an abundant natural resource, large foreign exchange reserves and growing consumer economy.
• India, PowerShares India (PIN), is a fast-growing economy rich in educated and intelligent people. It is expected that the resurgence in India will have companies scouring for employees. But the country is crowded and has a poor infrastructure system. It has limits on foreign investment which may constrain growth.
• China, iShares FTSE/Xinhua China 25 (FXI), is seen as too dependent on its exporting industry. It is the world’s third-largest exporter and is left unshielded against a stagnant global economy.For those intrigued by the BRIC countries or other emerging markets, ETFs can target a specific emerging market with a fund for that country and they can target a region or class of emerging markets with a broad-based fund.

  The savvy investor should get ready for the time when the goddess of the markets once again graces us with her return. Our strategy notes that when a fund crosses above its trendline (the 200-day moving average), we’ll consider

By now, all investors should know that China is a growing force in the global economy, but the question at hand is how does an investor play the Chinese market with exchange traded funds (ETFs) to satisfy his or her appetite? ETFs that track the emerging markets are plentiful and can be broken down into the general categories of direct exposure, BRICs exposure, and mixed exposure, states Richard Kang of Index Universe.

An example of a direct exposure ETF is the SPDR S&P China (GXC), which is down 47.8% year-to-date; a BRIC exposure ETF is iShares MSCI BRIC (BKF), which is down 56.8% year-to-date; a mixed exposure ETF is SPDR S&P Emerging Markets (GMM), which is down 49.8% year-to-date. Investors can also gain indirect exposure to China through Asia Pacific funds like the SPDR S&P Emerging Asia Pacific ETF (GMF), which is down 47.8% year-to-date.

Note that GMF and GXC and have crossed above their short-term 50-day moving averages, while GMM and BKF are hovering near that key point.

With all of these choices, investors must really take the time to consider just how exposed to China they want to be, whether to consider emerging markets as core or non-core holdings in their portfolios, and the optimal balance between the focus on return enhancement versus risk reduction.

Lastly, this last year’s market performance has indicated that moving away from the classic theory of diversification based on a mix of relatively uncorrelated positions results in having all your eggs in one basket.

Research has indicated that when diversifying away from developed markets to emerging markets investors may actually be anit-diversifying, focusing on return enhancement rather than risk exposure. Additionally, when investing in emerging markets, like China, it should be long term because of China’s dependency on the decoupling theory of the economy from the western world and this theory further trickling down to the emerging markets-this trend takes time to play in.

It is all dependent on an investor’s goals, but the vast array of exposure to Chinese markets allows them to pick and choose which ETFs will support their investment styles.

Once thought to be de-coupled form 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.

Three BRIC ETFs he examines are:

• SPDR S&P BRIC 40 Index (BIK): down 58.5% year-to-date; 0.5% expense ratio

• iShares MSCI BRIC Index (BKF): down 61.2% year-to-date; 0.75% expense ratio

• Claymore Bank of New York BRIC (EEB): down 57.1% year-to-date; 0.7% expense ratio

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.