Sunday, June 24, 2012

BRICs Are Sinking Like a Stone. It Might Be Time to Buy

From the WSJ: Stock markets in Brazil, Russia, India and China have tumbled of late on signs of slowing economic growth.  That is presenting an opportunity for investors to buy what others are fleeing. The BRIC markets now look cheap based on their corporate profits and dividends. And despite slowing growth, their long-term prospects remain bright.

The key is to choose the best way to buy in. BRIC mutual funds pose problems, as do other stock funds that track small baskets of emerging markets with names like "Next 11" and "Civets." Investors should look instead to broader emerging-markets funds that can buy wherever the bargains appear.

The BRICs got their name from a 2001 paper by Goldman Sachs GS -0.29% economist Jim O'Neill, now head of the firm's asset-management division, who cited those countries' potential for rapid economic growth. As predicted, their economies have expanded much faster than developed markets like the U.S.  The returns, however, have been less pleasing….

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