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Exchange traded funds with diverse holdings in emerging markets outperformed "BRIC" investments in the three-month rally that began in March.
Three emerging market ETFs, in the table below, surged as much as 78% in the three months through May. The three best BRIC funds -- with holdings in Brazil, Russia, India and China -- posted gains of up to 70%.
The BRICs were held back by more concentrated investments. While three of the four countries performed well, a single lagging market hobbled results.
Energy and basic materials powered all six of the funds. The
SPDR Emerging Europe ETF
has 50% of its assets in Eastern European energy stocks, two-thirds of which are in Russia. Top holdings include energy giants Lukoil Holdings, Gazprom and Rosneft.
Energy was a major driver in the returns of the three BRIC funds. It's the largest sector in each, making up 33% of the value of the
SPDR S&P BRIC ETF
, 28% of the
iShares MSCI BRIC Index Fund
and 25% of
Claymore/BNY BRIC ETF
Still, the BRICs are down by more than a third over the past 12 months, as oil is at half the level of a year ago. The energy-heavy SPDR S&P Emerging Europe ETF has fallen by about 50%.
The best-performing non-leveraged ETF during the three-month rally was the Market Vector Russia ETF RSX, up 110% for the period. It was followed closely by
Claymore/AlphaShares China Real Estate
iPath MSCI India Index ETN
, both of which surged more than 90%.
But the fact that the best-performing Brazilian ETF,
iShares MSCI Brazil
, was far down the list with an advance of 61% shows that one underperformer can put a drag on returns.