ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Is the BRIC Getting Heavy?
News
Share

Is the BRIC Getting Heavy?

Stoyan BojinovApr 06, 2016
2016-04-06

With emerging markets taking a dive early into April, many investors are finding themselves questioning if the recent run-up was owed to improving fundamentals or inflated optimism.

Buying something just because it’s “cheap” often turns out to be more costly of a strategy than most investors initially believe.

BRIC Review

Each of the BRIC nations has lured bargain hunters in recent years, offering gains only to those nimble enough to lock in profits. From an intermediate-term perspective, the picture for this group has been murky at best.


Content continues below advertisement

bric countries five years

Over the past five years,

  • China (FXI A) and India (EPI C+) have been confined to massive ranges.
  • Brazil (EWZ A-) and Russia (RSX B) have been steadily trending lower.

All too eager bottom-fishers and deep-value seekers with no regard for the overarching fundamental headwinds have been punished as evidenced by the BRIC’s uninspiring price trends in recent years.

Fundamentals

Brazil

GDP is contracting at around 6% annually and the nation is still facing stiff recessionary and corruption headwinds. While recent political developments are encouraging, it’s still too early, and perhaps too optimistic on investors’ part, to tell if there will be meaningful changes that promote stability and inspire growth.

Russia

The Russian economy is contracting at around 4% annually, hurt largely by weak oil prices and weak conditions in its neighboring EU and China trading partners. While they certainly have room to do so, Russia’s central bankers are giving few reasons for investors to count on a rate cut. This sort of hawkish policy amid a fragile economic backdrop appears mismatched.

India

India’s GDP is growing briskly at around 7% annually, taking the spotlight in the BRIC group when it comes to economic growth. Reform efforts are strong and aimed at manufacturing, an important and largely underdeveloped sector of the nation’s economy.

China

While manufacturing remains weak, financial reforms and the continued commitment on the part of policymakers has proven encouraging for investors. Plus, China’s dominance on the global stage is unmatched by Brazil, Russia and India.

Be sure to read Why India Is Still Playing Catch up to China.

Outlook

Putting it all together, the BRICs as a whole have stubbornly lackluster fundamentals matched with pro-growth initiatives on the policy front; whether any of these reforms actually take root is something investors will have to keep an eye on as time goes by. Ultimately, investors will have to do their own homework to uncover any meaningful signs of whether or not long-standing headwinds plaguing the BRIC pack may be scattering for good.

Under the Hood of BRIC ETFs

Back to the charts. Let’s see how BRIC has performed versus EM as a whole since the February lows:

BRIC etfs since feb 11

Key takeaways:

  • All three BRIC ETFs are ahead of (EEM A-), with (EEB C+) taking the lead

There is a notable performance gap among the three ETFs tracking the same markets. As they say, the devil is in the details; in this case, it’s the country breakdown details.

Note: country weights are as of 4/4/2016; EEB has ~ 3% allocated to non-BRIC countries.

ETF/Country WeightsBrazilRussiaIndiaChina
(BIK B+)9%10%9%72%
(BKF B)15%9%19%57%
(EEB C+)18%18%14%47%

Key takeaways:

  • BIK and BKF maintain significantly larger allocations to China than EEB.
  • EEB affords almost twice as much weight to Russia than BIK and BKF do.

Now consider the below comparison capturing the same time frame as highlighted in the returns chart above, this time looking at performance on a country-specific level.

BRIC country breakdown feb 11

Key takeaways:

  • Brazil is the clear winner here, followed by Russia.
  • India and China are the laggards of the group.

Now we can conclude that EEB has been a clear winner among BRIC ETFs within the scope of the most recent rebound, given its more favorable tilt towards two of the best-performing markets from the pack, Brazil and Russia; furthermore, this ETF also maintains a notably smaller allocation to China, a laggard in this instance, compared to its peers.

More Ways to Play BRIC

In addition to the broad-based BRIC funds and a few of the single-country ETFs highlighted above, investors should also consider the following lists:

  • Brazil ETFs.
  • Russia ETFs.
  • India ETFs.
  • China ETFs.

The Bottom Line

Recent gains for the BRIC group are encouraging, but the bearish price trends over a multiyear horizon and slowly changing fundamentals remind us to remain cautious. If you’re going to dive into emerging markets, and especially after their recent run-up, it is recommended you do so in baby steps and scale into a position, as opposed to jumping all in.

Follow me @SBojinov

» Popular Pages

  • Tickers
  • Articles

Feb 03

Main Management Market Note: February 3, 2023

Feb 03

SPYI, a High-Income ETF Within Equities, Up 10%

Feb 03

Navigating Exchange FOMO for Advisors

Feb 03

In 2022, Main Supply of EU Electricity Was Renewable

Feb 03

VettaFi’s ETF Rising Stars: January 2023

Feb 03

Big Tech Is No Longer Certain; Consider Active

Feb 03

Equal-Weight Cloud Computing ETF WCLD Hits Buy Signal

Feb 03

American Century's KORP, VALQ Hit 5-Year Mark

Feb 03

Bitcoin Opens 2023 Strong, Outperforms Bonds

Feb 03

These 2 ETFs Show Growth Is Back in Style

QQQ

Invesco QQQ Trust

SPY

SPDR S&P 500 ETF Trust

VOO

Vanguard S&P 500 ETF

VGT

Vanguard Information...

SMH

VanEck Semiconductor ETF

XLK

Technology Select Sector SPDR...

VTI

Vanguard Total Stock Market...

SOXX

iShares Semiconductor ETF

BLOK

Amplify Transformational Data...

META

Roundhill Ball Metaverse ETF


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X