A number of fund companies are offering specialized emerging-markets funds that focus on Brazil, Russia, India and China, or "BRICs," following a Goldman Sachs report predicting the economies of these nations will produce the fastest growth in the world in the coming 40 to 50 years, The Wall Street Journal reports. In fact, Goldman projects that by 2050, only the economies of the U.S. and Japan will be greater than the four BRICs combined.
Franklin Templeton Investments, HSBC Asset Management, Deutsche Asset Management and Schroders Investment Management are four companies that have recently begun offering BRIC funds to European and Asian investors, but because these types of funds are so specialized, no firm has yet offered them as a mutual fund in the U.S. Instead, there are a few private BRIC investments available here.
Certainly, there has been tremendous growth in BRIC stocks in the past few years. Since the end of 2002, the Morgan Stanley BRIC index has surged 262% while its emerging-market index has risen 171%. Deutsche's BRIC fund has increased 65% in value since its debut 12 months ago. Christian Deseglise, manager of HSBC's emerging-market products, says that unlike other emerging-market nations that are nearly developed, Brazil, Russia, India and China are a long way off from reaching that stage--and therefore capable of faster growth.
But some caution that the kind of eye-popping returns these nations have been delivering carry the same kind of volatility as Internet stocks and that investors would be better served in diversified emerging-market fund, which in and of themselves carry risk.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.