The BRIC quartet of Brazil, Russia, India and China are making their presence felt in this year’s emerging markets rally.
That theme is benefiting exchange traded funds such as the iShares MSCI BRIC ETF (NYSEArca: BKF) and the Guggenheim BRIC ETF (NYSEArca: EEB). That duo is up an average of about 13% year-to-date.
The weaker dollar has been helping emerging markets assets this year and many bond traders believe the Federal Reserve will not raise interest rates next month and it is possible the Fed will not do so again this year.
Although emerging markets exchange traded funds are among this year’s most prolific asset gatherers in the U.S., some market observers argue that emerging markets equities are under-owned by big investors and that the asset class has more room to rally.
“Wooed by India’s efforts to streamline regulations, Brazil’s economic rebound stabilizing prices for Russian oil exports and China’s stronger currency, traders are warming to the countries’ higher yields and better outlook for equities,” reports Bloomberg. “It’s an abrupt reversal after they were scorched by a 40 percent drop in the biggest BRIC exchange-traded fund from the end of 2012 through early 2016 as Brazil lost its investment grade, Chinese growth slowed from a meteoric pace, Russia’s oil revenue plummeted and India’s current account deficit swelled.”