The four nations of Brazil, Russia, India and China, collectively known as the BRIC, have changed how investors view of emerging markets. When Goldman Sachs (NYSE:GS) analyst Jim O'Neill, first coined the acronym over a decade ago, even he had no idea how big it would become. Besting even the investment banks own growth forecasts, the group has gone on to surpass a variety of developed market nations, in terms of economic prowess. Individual investors have embraced the concept in spades, with funds like SPDR S&P BRIC 40 (NYSE:BIK) seeing their assets swell. However, with the BRIC's continued rise to economic dominance, O'Neill's latest advice is to stop thinking of them as emerging markets and think of them as something in between.

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Call Them "Growth Markets"
In a speech at the Confederation of British Industry's employers' conference, O'Neill urged investors to stop calling the BRICs emerging and start referring to them as growth markets. As these four nations have seen their fortunes prosper and grow, they have moved beyond the emerging market moniker. In O'Neill's opinion, they have emerged. Although, not quite ready to be called developed, these growth markets will continue to see higher than average GDP and economic growth. Overall, the analyst believes that "it is kind of ridiculous to be thinking of these countries as emerging markets in the traditional sense. It is not sensible in terms of business." (For more on GDP, see The Importance Of Inflation And GDP.)

The BRIC creator isn't telling investors to abandon the four nations, quite the contrary. Over the next year, he believes that China will grow by the equivalent of Italy, which is currently the world's eighth largest economy. He is telling both investors and policy makers that they must see these countries apart from the traditional emerging markets; that they play a different part in portfolios and the world order.

For the average investor, these newly minted growth markets could be a great blend of continued growth opportunities, as well as some stability. A good analogy would like comparing them to mid-cap stocks, having some attributes of both small- and large-cap firms.

Finding the Remaining Growth Markets
While opportunities in the BRIC have been well documented, via group funds like the Guggenheim BRIC (NYSE:EEB) or individual country funds like the PowerShares India (NYSE:PIN), there are other "growth market" nations that offer prospects. Taking from his Next 11 concept, O'Neill believes that four other nations, in addition to the BRIC, could be great buys for the next few years.

Mexico continues to play second fiddle to Brazil, which is a shame. Rich in farmland, silver and copper, Mexico's export driven economy has thrived since the implementation of the 1994 NAFTA agreement. Recent trade deals with China and the EU will serve to do the same. The iShares MSCI Mexico (NYSE:EWW) offers a broad take on the country, while individual firms like tortilla maker Gruma (NYSE:GMK), offer an interesting take on the nation's consumer story.

Blessed with vast natural resources and very large young population, Indonesia could be the heir apparent to the growth market throne. To capture that opportunity, both the Market Vectors Indonesia Index ETF (NYSE:IDX) and iShares MSCI Indonesia (NYSE:EIDO) make ideal choices. (For related reading on the forward P/E, see How To Use The P/E Ratio And PEG To Tell A Stock's Future.)

Finally, trading near its 52-week low, the iShares MSCI Turkey (NYSE:TUR) could offer one of the deepest discounts in the "growth market" world. Offering a more service orientated economy, versus other emerging/growth markets, Turkey provides a unique opportunity in the space.

The Bottom Line
For investors, Jim O'Neill's new take on the BRIC and "growth markets" presents an interesting perspective on how we should see the world. Finding their place in between the developed and emerging spaces, the previous countries, along with South Korea (NYSE:EWY), provide a balance of growth and new-found stability, for portfolios.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Aaron Levitt did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: United States Gasoline Fund

    Learn about the United States Gasoline Fund, the characteristics of the exchange-traded fund, and the suitability and recommendations of it.
  2. Mutual Funds & ETFs

    ETF Analysis: United States 12 Month Oil

    Find out more information about the United States 12 Month Oil ETF, and explore detailed analysis of the characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Ultra Nasdaq Biotechnology

    Find out information about the ProShares Ultra Nasdaq Biotechnology exchange-traded fund, and learn detailed analysis of its characteristics and suitability.
  4. Mutual Funds & ETFs

    ETF Analysis: Direxion Daily S&P Biotech Bull 3X

    Learn more about the Direxion Daily S&P Biotech Bull 3x exchange-traded fund, a new triple-leveraged ETF tracking biotechnology equities.
  5. Mutual Funds & ETFs

    ETF Analysis: First Trust Health Care AlphaDEX

    Learn more about the First Trust Health Care AlphaDEX exchange-traded fund, an indexed fund that uses an advanced stock selection methodology.
  6. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI Emerging Mkts

    Learn more about the PowerShares FTSE RAFI Emerging Markets ETF, a fundamentally weighted fund that tracks emerging market equities.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares Cali AMT-Free Muni Bond

    Learn more about the iShares California AMT-Free Municipal Bond exchange-traded fund, a popular tax-advantaged ETF that dominates its category.
  8. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Dividend

    Learn more about the SDPR S&P Emerging Markets Dividend Fund, a yield-focused exchange-traded fund tracking global emerging economies.
  9. Mutual Funds & ETFs

    ETF Analysis: First Trust Dow Jones Global Sel Div

    Find out about the First Trust Dow Jones Global Select Dividend Index Fund, and learn detailed information about characteristics and suitability of the fund.
  10. Mutual Funds & ETFs

    ETF Analysis: U.S 12 Month Natural Gas

    Learn about the United States 12 Month Natural Gas Fund, an exchange-traded fund that invests in 12-month futures contracts for natural gas.
RELATED TERMS
  1. Trade Credit

    An agreement where a customer can purchase goods on account (without ...
  2. Equity

    The value of an asset less the value of all liabilities on that ...
  3. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  4. Brazil, Russia, India And China ...

    An acronym for the economies of Brazil, Russia, India and China ...
  5. Optimal Currency Area

    The geographic area in which a single currency would create the ...
  6. European Sovereign Debt Crisis

    A period of time in which several European countries faced the ...
RELATED FAQS
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  6. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!