There are numerous reasons to invest in BRIC countries over the next decade. First and foremost, the BRIC and emerging markets nations are not riddled with debt and are building up their foreign currency reserves which has helped them enjoy credit upgrades rather than downgrades by S&P and Fitch which we have noticed with a number of developed nations over the past year. Many of the BRIC countries are rich in resources, have an abundance of young and very educated work force that will continue to accumulate wealth and therefore demand and consume more. Nigel Green who is the boss of the world’s leading independent financial advisory group says that “Aggregate consumption between the four countries is currently estimated to be around 4 trillion dollars and this is expected to grow by around 15% to 20%. Therefore, by the middle of the decade, the BRIC nations will see their combined consumption increase by more than a trillion dollars – and this is a conservative estimate.” Starbucks is quick to recognize this domestic consumption story and will be trying to capture part of the growth by opening its first establishment next month as part of an overall investment of approximately $78M in the subcontinent. Green believes it would be wise given the current market conditions to have a very diversified portfolio and to follow in Starbucks strategy and incorporating BRIC nations in your balanced portfolio.
Goldman Sachs Jim O’Neill also believes that the Next Eleven (N-11) namely Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea and Vietnam, alongside the BRIC nations are also very noteworthy countries to be investing in over the next decade. Mr Green notes that “It is estimated that within the next decade the combined GDP of the BRIC and N-11 countries will be double that of Europe and the US together.”
With this in mind, our BRIC Fund not only invests in BRIC countries but also other emerging markets nations, is coming up to a 3 year track record come November 2nd, 2012. It is not only the best performing BRIC mutual fund in Canada but it has also done well this year with a gain of 5.89% YTD (Source: Globefund as at October 5, 2012).
Written by Devin L.
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