What are BRIC ETFs

BRIC ETFs are exchange traded funds which invest in stocks associated with BRIC nations, which are Brazil, Russia, India and China. These are countries which are considered as the leaders of emerging economies because of steady and fast economic (GDP) growth in the past and are constantly exploring their high levels of natural/human resources. BRIC ETFs allow investors to passively benefit from this growth.

BRIC ETFs are excellent ways to diversify the investment portfolio. They are also believed to offer better returns than ETFs tracking NYSE and S&P; or American and European markets as a whole. Different BRIC ETFs may have different weightage for different countries; for example Claymore BRIC ETF (EEF) has the following allocation proportions - Brazil 46%, Russia 5%, India 13% and China 36%. Apart from tracking the securities traded in BRIC exchanges, many BRIC ETFs also track stocks of BRIC countries traded in American and European markets.

Many investors consider BRIC ETFs as an alternative way to profit when the dollar and US economy are weak. BRIC ETFs usually have higher expense ratios than traditional ETFs. They are also considered risky as the political climate of these nations can change drastically. The recent recession, which hit these economies too, has also raised some concerns over these economies. The decoupling theory of emerging markets, which stated these economies will grow independently, has also proved wrong so far.

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