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Fed Gives BRIC ETFs a Helping Hand


After a rough year, exchange traded funds that track BRIC countries – Brazil, Russia, India and China – are steadily improving and were bolstered following the Fed’s intention to keep its ultra-loose monetary policy.

Over the past month, the Guggenheim BRIC ETF (EEB) gained 11.6%, iShares MSCI BRIC ETF (BKF) was 11.8% higher and the SPDR S&P BRIC 40 ETF (BIK) rose 11.4%. [Run, Don’t Walk to BRIC ETFs]

“We can assume this rally is going to last for some time, probably at least a few weeks,” Murat Toprak, emerging FX strategist at HSBC, said in a Reuters article. “There is a reassessment by the market of monetary policy changes going forward.”

Assets have been flowing back into emerging markets as investors put cheap Fed cash to work in riskier assets. [BRICs Lead Emerging Market ETFs]

Speculation that rates could stay low for a longer-than-expected period was also reinforced by hints that Janet Yellen, who has shown dovish tendencies, would take over the Fed after Ben Bernanke.

Looking at the country-specific ETFs, the iShares MSCI Brazil Capped ETF (EWZ) increased 16.6% over the past month, Market Vectors Russia ETF (RSX) rose 12.1%, WisdomTree India Earnings ETF (EPI) was up 16.3% and iShares China Large-Cap ETF (FXI) was 7.8% higher.

Michael Santoli for Yahoo! Finance points out that Indian equities ranked among the worst performers during the rout in emerging markets this  year and represent an intriguing potential opportunity for emerging market investors. The Reserve Bank of India’s new Governor Raghuram Rajan unexpectedly raised key lending rates to fight inflation. Moreover, the economy is also dependent on internal domestic consumer growth and technology development.

Guggenheim BRIC ETF

For more information on BRIC countries, visit our BRICs category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own EEB.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.