'BRIC' ETF Needs to Build Results

You've probably heard the term BRIC, an acronym for Brazil, Russia, India and China. Many consider these countries the four horsemen of the emerging-market renaissance of the last few years. Market players have expected to see some sort of investment product that would capture the four countries, however gimmicky the idea. Now Claymore Investments has delivered with its Claymore BRIC ETF, which just started trading on the Toronto Stock Exchange under the ticker CBQ. The ETF is expected to start trading in the U.S. in October.

Because this fund is new and foreign -- as I noted above, it's trading in Canada now -- there is a 40-day "seasoning period" that makes it unavailable to U.S.-based investors until mid-October. That gives would-be investors a little time to get some sense of how it trades compared to both broader and narrower emerging-market products. I wouldn't rush to put my money down on this buzzword, but it's definitely going to remain on my radar screen. I'll keep you updated on my opinion about this instrument as it evolves along with the CBQ.

If I were designing the literature for this fund, I might put the "B" in a 48-point font and the "R" in a 6-point font, because those are the respective weightings of those two countries. China is weighted at 31.28% and India at 13.95%; that's still quite a spread, but not as wild a contrast as the Brazil and Russia percentages.

The fund mimics the Bank of New York BRIC Select ADR Index.

Weight Issue Good correlation to Russia may not mean much given the low exposure

Source: BigCharts.com

Chart information (excluding the sales literature) only goes back to June, which is when the index was launched. While Russia (in blue) shows a good correlation to the BRIC index (in black) and Brazil, it is possible that a big move in Russian holdings from here could have a muted impact on the fund because they're so lightly weighted.