BRIC ETFs

BRIC ETFs are effectively one of the more popular ways to invest in the Brazilian, Russian, Indian and Chinese economies, gaining a diverse range of investments which would otherwise be nigh on impossible to replicate for individual investors or institutions. BRIC ETFs (exchange traded funds) allow investors exposure to funds which can replicate almost exactly the share weightings of specific indices, whether this is for a specific country, group of countries or a specific sector.

Difficulty investing in BRIC countries

The very fact that for the majority of investors, investing in BRIC countries will mean taking on-board currency risks and investing in markets in which they have little or no knowledge offers its own potential pitfalls and problems. Then there is the fact that individual investors, investing directly into any one stock market index, would find it difficult to replicate the general trend of the economy. As a consequence, collective investments and index tracking investments such as BRIC ETFs offer a perfect opportunity to replicate the long-term direction of the underlying economy as opposed to the very volatile and often unpredictable direction of individual shares.

Investor protection

While BRIC ETFs have been around for some time it is only recently that the regulators have taken more notice and afforded investors more protection going forward. These exchange traded funds were initially dealt “over-the-counter” between large institutions although this soon expanded into the general marketplace. The amount of exchange traded funds now available and their growing popularity has forced regulators in the US, UK, Europe and around the world to issue new guidelines and bring under their umbrella the regulation of BRIC ETFs.

While there was nothing to suggest that historic regulation and guidelines associated with exchange traded funds were lax in anyway, we have seen various investment scandals and loose regulations impacting upon the overall viability of investment markets around the world. It is this reason and this reason alone that the regulators are now taking more interest in BRIC ETFs.

Trading your investments

Thankfully there is a very liquid and very fluid market in BRIC ETFs which effectively means that investors can literally buy and sell their investment units as and when they see fit. Even though BRIC investments should be considered on a long-term basis there will be times when funds are required or situations change and a reduction or sale of a fund holding would be sensible. Can you imagine the cost and the logistical nightmare of buying and selling individual shares which make up specific stock market indexes around the world?

Conclusion

In the ever evolving world of international finance BRIC ETFs are now more commonplace than ever before and proving a big hit with individual and institutional investors. The ability to gain exposure to a wider marketplace than would normally be possible for an individual or institution effectively reduces the number of peaks and troughs in the value of your investment. This is not to say that any BRIC investment will have a smooth ride to profitability and success, but investing via BRIC ETFs should reduce the volatility.

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