The world of international finance does not stay still for very long and the ongoing demand for investment exposure to BRIC countries, i.e. Brazil, Russia, India and China, continues to grow. As a consequence we have seen the creation of a number of BRIC securities and investment vehicles which investors are now looking towards when considering an investment in Brazil, Russia, India or China. So what exactly is there on offer and how should you approach exposure to BRIC countries?
Investment vehicles available
There are a number of different investment equals available when looking for exposure to BRIC countries which include:-
As the name suggests, direct equities are in fact the purchase of individual shares in individual companies in an overseas market. Even though the ability to buy individual equities in any market around the world has improved dramatically over the last few years, due to electronic trading systems, there are still specific risks associated with it. Aside from the c invest in brics currency urrency risk it can also be difficult to keep track of the underlying share and any news which filters through to the market.
For many people collective investments in BRIC countries are perhaps the best way forward as BRIC securities can take many different forms. You can look towards either individual sector exposure, general stock market exposure or indeed any mixture of the two. The idea behind BRIC securities is the ability to mirror the underlying economy therefore reducing the volatility of individual shares while enjoying the general, hoped, upward trend in the economy. Even though collective investments in emerging/undeveloped economies or underdeveloped economies will still prove very volatile compared to more developed countries around the world, collective investments will reduce the volatility compared to individual equities.
Which BRIC investments should you choose?
There are BRIC securities available in areas such as Brazil, Russia, India and China which will give you exposure to any one or any mix of the above markets. You will need to consider your risk profile, financial liabilities and financial requirements for the future before looking at investing overseas in BRIC countries. After this you will need to consider which investment vehicle best fits your investment profile and investment strategy and whether this is a sensible move.