There are many emerging markets around the world, but the largest four are known as “BRICs” (an acronym for Brazil, Russia, India, and China). Many investors believe that these markets are relatively stable and could replace the G7 as the next global powers. This makes them essential for any international investor’s portfolio.
Considerations
Before investing in BRICs, investors should first familiarize themselves with emerging markets. With a little basic research, international investors can build a strong understanding of emerging markets and some ways to gain exposure to their economies.
Definition
The term “emerging markets” is often used in the world of international investing, but it is difficult to pinpoint a precise definition. Instead, it is better to recognize the key characteristics of emerging markets, how to identify the most promising emerging markets, and the best way to build them into an international stock portfolio using exchange-traded funds and mutual funds.
How to Invest
There are many ways to invest in foreign markets, each with its own set of advantages and disadvantages. Educate yourself about the available options and how to choose the best option for your investment portfolio.
Diversifying Your Portfolio
There are some benefits to investing in BRICs using mutual funds and exchange-traded funds. Unlike buying individual stocks and bonds, these securities are much easier to manage and offer greater diversification. Consider the benefits and risks associated with investing in emerging market economies like BRICs when including them in any portfolio.
Brazil
Brazil has experienced an economic miracle over the past decade. In fact, Brazil is now the second-largest producer of iron ore in the world and produces more ethanol than both Asia and Europe combined!
Russia
Russia is often considered a Siberian wasteland, but it is one of the most important investment destinations in the world. As a major supplier of oil and natural gas to Europe, the country has benefited from secular growth in commodities and continues to expand.
India
China is usually referred to as the most promising economy in Asia, but India should not be overlooked. With its promising “demographic dividend” and significant agricultural output, investors should certainly consider adding it to their portfolios.
China
China is expected to surpass the United States in the coming years, making it extremely important for any international portfolio. But due to the government and surrounding controversies in the country, it is important for investors to be aware of some key risks. Discover how to gauge these and invest properly in this rapidly growing emerging economy.
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Sources:
- The Observatory of Economic Complexity. “Iron Ore.” Accessed Oct. 25, 2021.
- Department of Energy. “Global Ethanol Production by Country or Region.” Accessed Oct. 25, 2021.
- European Commission. “From Where Do We Import Energy?” Accessed Oct. 25, 2021.
Source: https://www.thebalancemoney.com/the-four-largest-emerging-markets-1979060
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