A reader wrote in recently wanting to know more about BRIC and the related exchange traded funds (ETFs). We’re here to help!
BRIC stands for four of the fastest-growing emerging markets out here: Brazil, Russia, India and China. In 2007, these countries delivered some of the biggest returns of any ETFs or exchange traded notes (ETNs) around. So far for 2008, BRIC ETFs and some of the single country funds have been fairly quiet.
But make no mistake: these countries are still growing, and could have plenty to offer down the line.
Brazil
Since 2004, Brazil’s economy has grown an average of 4.5%, according to a story in the Economist. Brazil has several factors working in its favor that some of its other BRIC brethren don’t necessarily share:
- There’s a multi-party democracy and freedom of expression
- The country doesn’t have the aggressive nationalism seen in some other countries
- Brazil has faced and dealt with inflation and debt.
Brazil produces and exports some of the world’s most popular agricultural products, including beef, orange juice, soybeans, sugar cane and coffee.
The Brazil ETF, iShares MSCI Brazil (EWZ), has been a strong performer. In 2007, it was up 72.5%. So far this year, it’s up 10%.
China
China’s ETFs were the talk of the town in 2007, with returns well into the double digits. But China is also still sporting a growing economy. Its gross domestic product (GDP) rose in 2007 by 11.9%, beating projections of 11.4%, for the fastest growth in 13 years.
Retail sales are on the rise, going up by 20.2% in the first two months of this year, reports Tony Sagami for Money and Markets. Auto sales are taking off, particularly in the area of luxury vehicles, for which sales are expected to grow between 40%-45% this year.