| BRICs alone won't build your portfolio's foundation
That's not to say that emerging markets aren't worthwhile. China's economy has increasingly raised the concern of international analysts. But what's left? Jim O'Neill, the chairman of Goldman Sachs Asset Management who coined the BRIC acronym a decade ago, suggests expanding your horizons to include Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam. And China is actually one possible weakening link in the BRIC strategy. The world's most populous country is still on track to become the world's largest economy in the next 2 decades or so, but its ascent might not be a clean, straight line. BlackRock's analysts pointed to China's real estate slump as the "biggest threat to economic growth and confidence in 2012. How did these developing countries compare with a BRIC fund such as the Guggenheim BRIC fund. Broader, more conservative portfolios make more sense. Slower global economic growth, though, remains the major roadblock to BRIC countries. 2 percent year-over-year in March, down from 4. O'Neill insists that the BRICs are still headed for explosive growth long term. Brazil, which is still expanding due to its natural resource wealth, recently cut benchmark interest rates in an attempt to revive its sluggish economy, which once was keeping pace with China's 7-percent-plus rate. Single-country targeted funds include the iShares MSCI Thailand Investable Market Index ETF, which led the pack of emerging markets ETFs with a 47-percent three-year return, Lipper found. Russia has had its setbacks and India is slowing down. But a global economic retrenchment is still possible, especially when you watch the debilitating euro zone austerity measures and the inability of the U. Congress to cut its growing budget deficit. Countries that have benefited from money moving from first-tier developed nations into emerging economies include Thailand, Colombia, Indonesia, Malaysia and Singapore. Did China overbuild and create a bubble? The BlackRock report is not definitive, although it noted "we struggle to find a precedent in history where the bursting of the bubble did not lead to financial distress. O'Neill's likely right about BRIC growth - if current trends continue. |
Tuesday 1 May 2012
BRICs alone won't build your portfolio's foundation
