The BRIC (Brazil, India, Russia, China) exchange traded funds (ETFs) have been much-ballyhooed in the wake of the global economic recovery, but there’s a new acronym in town: the MAVINS.
BRIC countries have been given a lot of press lately, but there are other interesting things taking place outside of the four economies, primarily in a group of countries categorized as the “MAVINS,” according to the ETFDesk Daily. [The BRIC economies today.]
While they’re not all emerging markets, one thing they all bring to the table is potential, thanks to strengthening economies and increasing growth potential.
Just who are these people, and why should we be paying attention?
Mexico. The country has a growing middle class and a positive population growth trajectory. Observers believe that the close proximity to the United States will allow Mexico’s government to basically become an extension of the U.S. economy and rapidly allow Mexico to close its income gap with us. Furthermore, Mexico is also a commodities play. The country is the world’s seventh largest oil producer, as well as a large exporter of silver, fruits, cotton and coffee. [The key to Mexico’s success.]
- iShares MSCI Mexico Investable Mkt Idx (NYSEArca: EWW)
Sector Allocations: Telecommunications Services, 35.2%; Consumer Staples, 22.8%; Materials, 13.6%; Consumer Discretionary, 12.7%; Industrials, 9.1%.
Australia. Australia is the richest commodities source in the world and it basically backs Chinese growth. China is Australia’s largest trading partner and is also a major investor of farmland and real estate in Australia. Additionally, the country has a well-developed manufacturing and services economy. The only problems that hold the country back are its water shortages and lower population per area of land. As the U.S. dollar appreciates, however, it could put more pressure on the carry trade and the Australian ETF.
- iShares MSCI Australia (NYSEArca: EWA)
Sector Allocations: Financials, 43.6%; Materials, 26.3%; Consumer Staples, 10%; Energy, 6.8%; Industrials, 4.5%; Health Care, 3%; Consumer Discretionary, 2.2%.
Vietnam. Vietnam has a quickly liberalizing economy, near-term political stability and a centralized command of a communist government. The country has a rich farm lands and it is developing its manufacturing sector. The population in Vietnam is already larger than that of France or Germany, and population growth is on an upward trajectory. Vietnam shares a lot of economic similarities to the China of 20 years past, such as the much lower labor costs that will make it a manufacturing contender. [Vietnam on track for growth.]
- Market Vectors Vietnam (NYSEArca: VNM)
Sector allocations: Financials, 44%; Energy, 24.2%; Industrials, 15.7%; Materials, 7.4%; Consumer Discretionary, 2.5%; Utilities, 2.3%; Consumer Staples, 1.6%.
Indonesia. The newly Democratic nation is becoming a fast-growing Asian economy. The average standard of living is still low, but that only means that the potential is that much greater. For instance, if Indonesia’s economy were on par with Mexico’s, it would be three times its current size. Indonesia is also rich in oil, gas, coal, tin, copper, silver and gold. Conveniently situated next to India and China, Indonesia is becoming a marginal supplier of natural resources to its increasingly insatiable neighbors. [Indonesia among the year’s best.]
- Market Vectors Indonesia ETF (NYSEArca: IDX)
Sector allocations: Financials, 25.2%; Materials, 23.1%; Energy, 14.6%; Consumer Staples, 12.5%; Consumer Discretionary, 10.9%.
Nigeria. Nigeria is the most populous country in Africa, with 155 million people, and it is expected to maintain a high birth rate through 2050. The country is growing and starting to liberalize its economy, having only just come into a Democracy. Some have argued, however, that Nigeria is heavily dependent on its rich oil reserves. Corruption is still rampant and there are some ethnic and religious conflicts. [Recovery in Africa ETFs.]
- There is no Nigeria country-specific ETF, but an investor may gain exposure to the region through Market Vectors Africa ETF (NYSEArca: AFK) – Nigeria is around 22%.
Sector allocations: Banking, 27.9%; Basic Resources, 19.7%; Telecommunications, 12.2%; Oil & Gas, 11.5%.
South Africa. South Africa is the strongest African economy, with modern institutes and commodity wealth such as gold, platinum, coal and diamonds. The economy is diversified with mining, agriculture, services, and manufacturing. Furthermore, South Africa is benefiting from its commodities advantage. Still, half the country lives below the poverty line. [South Africa, a return to normalcy?]
- iShares MSCI South Africa Index Fund (NYSEArca: EZA)
Sector allocations: Materials, 27.8%; Financials, 26%; Telecommunication Services, 12.9%; Consumer Discretionary, 11.4%; Energy, 10.5%.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.