Slowly Drowning BRIC By: Gabriel PotterMBA, AIFA® 2015.11.11

The BRIC acronym – Brazil, Russia, India and China – was a shorthand investment thesis for the strongest growers in the emerging markets.  When the term was coined in 2001 by Goldman Sachs, the fund got to enjoy the tailwinds of rapid expansion right up until the financial crisis of 2008-2009.  Since then, international markets have suffered relatively and no major asset class has suffered as much as the emerging markets.  In the long term, there is still a strong investment thesis for prudent investing in emerging markets.  Long term asset allocation studies, which include data for several market cycles, demonstrate the worth of high-growth, high-risk allocations as part of a total portfolio.  In the short term, however, BRIC investment as the primary method for emerging market exposure has had some problems for the originating firm.  As a result, Goldman Sachs is shutting down its BRIC investment fund after several years of losses, both in terms of asset flows and market performance.  The BRIC countries will still have a large impact on the combined performance of emerging market investing – which is still popular, despite the headwinds.  However, the assertion that the fastest growing emerging markets of 2001 were destined to be the primary investment winners ad infinitum was overstated. 

On a humorous note, the popularly of BRIC investing has, at least, spurred interest in investing via fashionable acronyms.  New contenders include MIVQU (Morocco, Indonesia, Vietnam, Qatar, United Emirates), MINT (Mexico, Indonesia, Nigeria, Turkey), or Next Eleven (Nigeria, Egypt, South Korea, and so on).

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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