BRIC ETFs Take the Lead

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Emerging market equities have been among the worst hit during the recent pullback, and as stocks rebound, BRICs or Brazil, Russia, India and China exchange traded funds are beginning to pull ahead.

The FTSE All-World BRIC Index showed a 3% return for 2018 through February 7 as Brazil jumped 10.5, Russia gained 8.2%, China added 2.4%, but India lost 3% for the period. To put this in perspective, the FTSE Emerging Index advanced 2.6%, FTSE All-World and Russell 3000 Indexes each returned 0.2% and the FTSE Developed Index was down 0.1% over the same year-to-date period.

The Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), which tracks the FTSE Emerging Markets All Cap China A Inclusion Index, returned 1.6% year-to-date. In comparison, the iShares MSCI BRIC ETF (NYSEArca: BKF) and the Guggenheim BRIC ETF (NYSEArca: EEB) gained 3.2% and 3.5% so far this year, respectively.

“The strength of Emerging markets led by Brazil, China and Russia can largely be attributed to the increased confidence in synchronized global growth, stronger commodity prices and a weaker dollar,” Alec Young, managing director of global markets research for FTSE Russell, said in a note.

Along with riding on the coat tails of the global economy, the emerging markets are also producers of some of the most highly demanded raw materials, such as industrial metals and crude oil. Furthermore, with a weaker USD, U.S. investors are more apt to diversify into international markets to capitalize on more favorable foreign exchange interactions.

ETF investors can also target these countries individually through the recently launched suite of Franklin Templeton country-specific ETFs, including the Franklin FTSE Brazil ETF (NYSEArca: FLBR), Franklin FTSE Russia ETF (NYSEArca: FLRU) and Franklin FTSE China ETF (NYSEArca: FLCH).

“The goal of our new collaboration with FTSE Russell is to provide investors with the ability to gain access to a diversified set of efficient non-US market exposures," Patrick O’Connor, head of global ETFs for Franklin Templeton Investments, said in a note.

For more information on the developing economies, visit our emerging markets category.

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