WHAT IS BRIC ETF

A BRIC ETF is an exchange-traded fund (ETF) that invests in stocks and listed securities associated with the countries of Brazil, Russia, India and China (BRIC).

1:48

An Introduction To Exchange-Traded Funds (ETFs)

BREAKING DOWN BRIC ETF

A BRIC ETF is an exchange-traded fund (ETF) invested in securities and exchange-traded instruments from Brazil, Russia, India and China (BRIC). A BRIC ETF is considered any single fund invested in either all four of these countries or any of the four countries. At one point in time there were many BRIC ETFs invested in all four countries, but as the idea of BRIC as a hot market set waned, these funds disappeared, and currently there are only two BRIC ETFs invested in securities in all four BRIC countries. BRIC ETFs may carry slightly higher expense ratios than funds focused on the U.S. and Europe due to the higher costs of investing directly in these foreign stock markets.

BRIC ETFs are designed to give holders diversified exposure to these growing countries. Assets are invested in both locally-issued stocks and shares that trade on exchanges in the United States and Europe. The portfolio allocation among the four counties may vary from fund to fund, but all ETFs in the space should be passively invested around an underlying index. 

BRIC Countries

Investing in the BRIC economies was on the rise from the beginning of the twenty-first century through the mid-2010s as increased economic globalization created higher levels of world trade and commerce, and investors were looking for potential for high growth. Brazil, Russia, India and China had strong growth in gross domestic product (GDP) over the past few decades, and because their growth rates and economies were seen as similar to each other and as important emerging economies, BRIC became a popular investment and expansion target. Traders and investors wanted to invest in BRIC local securities, and companies and entrepreneurs wanted to bring their companies to BRIC countries to capture large markets with increasing amounts of capital and increased exposure to the consumption habits of developed nations.

BRIC countries became especially hot investment targets after the American financial crisis or 2008, as the BRIC economies were still on the rise, but because of relative economies, individual securities and ETFs were still affordable to investors. As the American economy recovered and BRIC economies leveled off and the startling growth of the 2000s slowed down, BRIC countries individually were seen more realistically and the concept of BRIC as a singular entity faded from popular thought.