Custom-Fitted BRIC ETFs
For many investors, the term, "emerging markets" immediately brings to mind a very specific basket of countries: Brazil, India, China and Russia. Together comprising the "BRIC" acronym, this foursome represents some of the largest and most recognizable players hailing from across the developing world.
While fast moving, these emerging and frontier markets are also inherently volatile. Given the size and influence of the BRIC countries, however, some of this risk may be toned down. Through the opening months of 2012, shares of the iShares MSCI BRIC Index Fund (BKF) and the SPDR S&P 500 ETF (SPY) have witnessed nearly identical performance.
Given its geographically expansive take on the BRIC nations, a fund like BKF may appeal to a conservative investor looking to test the emerging market waters. Meanwhile, those with a more aggressive appetite for risk can turn to individual nations in order to personalize or enhance their own unique BRIC exposure.
The latter plan is especially appealing considering the recent performance seen from these four nations. BKF, like most other BRIC-focused ETFs, sets aside the bulk of its portfolio to China and Brazil. Unfortunately, as macroeconomic headwinds have gathered, these two nations have become notable laggards.
Although they remain buoyed in positive territory, both the iShares FTSE China 25 Index Fund (FXI) and the iShares MSCI Brazil Index Fund (EWZ) have struggled to hold up, compared to BKF and broader emerging markets ETFs like the Vanguard Emerging Markets ETF (VWO) . FXI, the worst performer of the duo, has seen less than 8% gains in 2012.