'BRIC' ETF Needs to Build Results

The sector makeup favors energy, with a 30.50% weight, and telecom, at 17.22%. As you might expect, materials also have a heavy weighting, at 13.47%.

Speaking of energy: Like a lot of investment products with exposure to Brazil, the fund owns both common and preferred shares of Petroleo Brasileiro(PBR) totaling 15.53%. While it has been a few weeks since we heard anything about the nationalization of oil fields in Bolivia, you should be aware that PB has enough exposure that it moved down on the Bolivia news.

By investing in the BRIC countries, CBQ has some overlap with other, broader-based ETFs such as iShares MSCI Emerging Market Index Fund(EEM), which has 32% of its assets in the BRIC countries.

It seems to me that anyone looking for exposure to emerging markets needs to think either more narrowly or broadly than BRIC. That may seem contradictory, but a broader fund such as the iShares Emerging Market captures many more countries, such as South Korea and South Africa. That allows investors to capture the asset class without having to be narrowly correct. Investors looking to make a narrow-based investment in a single country get, at best, a watered-down product from the CBQ.

On the plus side, the BRIC countries are expected to have a higher GDP growth, more than 8%, than any of the developed markets over the next 10 years, according to Claymore Investments literature. While this makes sense, it's worth noting that the 8% also eclipses estimated growth rates for Latin America, Asia and Eastern Europe as projected in a report from Danish Jyske Bank on emerging markets dated September 2006. This is potentially compelling, as is CBQ's track record for outperforming the iShares Emerging Market, shown in this chart from Claymore.

That's an attractive quality. But this is a new instrument, and because it is so new, there is no need to decide today whether this is something you should own. But if you do study and invest in emerging markets, I believe this fund should be in the universe of what you follow.

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