Invest In BRICS Progress With These ETFs

July 16, 2014



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The BRICs countries (Brazil, Russia, India and China) have officially unveiled plans to form a self-funded bank to rival the Western-dominated financial institutions that dominate global finance today.

According to Reuters, the bank will invest in infrastructure projects in developing countries and will also include a $100 billion currency reserve pool. The reserve pool is a large sum of cash that will be a resource to "dress the window" in instances like the "taper tantrum" when hot capital rushed out of emerging markets at a destabilizing rate.

The idea is that such an institution will provide the capital and stability necessary for BRICS growth moving forward. For investors looking to add exposure to BRICS countries, there are three ETFs available:

  • The iShares MSCI BRIC ETF (BKF | C-97) is the most liquid fund in the segment and also provides the most comprehensive exposure to BRIC companies.
  • The SPDR S&P BRIC 40 ETF (BIK | B-68) takes a more concentrated approach to BRIC countries, as it holds a portfolio consisting only of the 40 or so largest BRIC companies.
  • The Guggenheim BRIC ETF (EEB | C-55) takes a different approach to the market, as it exclusively holds American depositary receipts (ADRs) and global depositary receipts (GDRs). ADRs and GDRs are securities that trade in London or the U.S. but represent claims of ownership to internationally traded securities. The purported advantage of this strategy is avoiding tax and administrative challenges that arise from trading or owning international securities.

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