Exchange traded funds that track Brazil, Russia, India and China (known collectively as the BRIC nations) are back. Since early February, they have significantly outperformed the S&P 500 index and the TSX composite index. The BRIC countries are benefitting from strong economic growth that significantly exceeds growth by the G7 nations.
Five exchange traded funds that tracks the BRIC nations currently are available on North American exchanges. Each has unique characteristics.
Best known and the most liquid ETF is iShares MSCI BRIC Index Fund . The fund holds a diversified basket of 227 securities. Weights by country are approximately 37 per cent China, 34 per cent Brazil, 15 per cent Russia and 14 per cent India. Largest sector weights are approximately 28 per cent in financial services, 26 per cent in energy and 14 per cent in materials. Management expense ratio is 0.69 per cent.
Claymore offers the Claymore BRIC ETF . The fund holds a diversified basket of 90 securities. It tracks the BNY Mellon BRIC Select ADF Index. Weights by country are approximately 55 per cent Brazil, 30 per cent China, 13 per cent India and 2 per cent Russia. Largest sector weights are 27 per cent in energy, 18 per cent in financial services, 11 per cent in materials and 10 per cent in technology. Management expense ratio is 0.66 per cent.
Guggenheim offers the Guggenheim BRIC ETF . This fund also tracks the BNY Mellon BRIC Select ADF index. Management expense ratio is 0.60 per cent.
Direxion offers the Direxion Daily BRIC Bull 2X Shares . Returns normally are two times the daily upside move by the BNY Mellon BRIC Select ADF index. Management expense ratio is 0.95 per cent. Trading is thin.
Direxion also offers the Direxion Daily BRIC Bear 2X Shares . Returns normally are two times the daily downside move by the BNY Mellon BRIC Select ADF Index. Trading is thin.
The BNY Mellon BRIC Select ADF Index and its related ETFs have a positive technical profile. Intermediate trend is up. Units trade above their 50- and 200-day moving averages. Since mid-February, the Index has gained 10.3 per cent while the S&P 500 Index has gained 1.1 per cent and the TSX composite index was improved 1.6 per cent. The index recently bounced from its 50-day moving average, an encouraging technical sign.
Don Vialoux is the author of free daily reports on equity markets, sectors, commodities and Exchange Traded Funds. He is also a research analyst for JovInvestment Inc. Reports are available at www.timingthemarket.ca and www.equityclock.com. Follow him on Twitter @EquityClock.