This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

BRIC ETFs Sport Small-Cap Look

NEW YORK ( TheStreet) -- The BRIC nations are popular for both investors and fund providers. Today, the ETF industry lists a wide collection of products designed to allow investors to tap into the markets of Brazil, Russia, India and China from a number of different perspectives.

The field of BRIC-related ETFs was expanded late last week with the launch of Van Eck's Market Vectors Russia Small Cap ETF (RSXJ). The first fund of its kind, RSXJ provides investors with exposure to a diverse collection of small companies based in Russia.

So far, the fund has seen limited interest and is still vulnerable to liquidity issues. I urge investors to hold off on RSXJ until it gathers steam.

Despite my hesitations, the launch of RSXJ marks an exciting event for the BRIC ETF universe. With its introduction, investors can now gain small-cap access to all four BRIC nations. Small companies in Brazil, India, and China can be accessed using the Market Vectors Brazil Small Cap ETF (BRF), Market Vectors India Small Cap ETF (SCIF) and Guggenheim China Small Cap ETF (HAO) respectively.

Small cap BRIC funds have usually been viewed as promising tools for investors looking to target these nations' rapidly growing domestic populations. For instance, the iShares MSCI Brazil Index Fund (EWZ) provides investors with exposure to the largest and most liquid companies based in Brazil and the fund's index is dedicated to large international companies such as Petrobras (PBR) and Vale. Due to their reach across the globe, the performances of these firms are not entirely dependant on the state of Brazil's economy.

The small companies underlying BRF, on the other hand, are more likely to do the bulk of their business with Brazilian customers. Therefore, their performance will be determined based on the strength of the nation's domestic consumer class.

On top of providing investors with strong exposure to its respective nation's domestic population, small cap emerging market ETFs are traditionally viewed as being more volatile than funds designed to capture large cap market leaders. Investors with a tolerance for risk may find the added upside potential attractive.

While some may find small cap BRIC funds attractive substitutes for large cap cousins, it is also possible to use these funds to compliment international exposure. For instance, investors highly confident in the strength of China's markets may want to enhance their exposure to the nation by pairing a large cap fund such as iShares FTSE China 25 Index Fund (FXI) with HAO. By keeping exposure to HAO small, investors can benefit from the fund's upside potential while protecting from the threat of a downturn.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BRF $14.23 -0.53%
EWZ $28.72 0.74%
SCIF $47.55 1.60%
HAO $27.11 0.07%
RSX $17.06 -0.29%

Markets

Chart of I:DJI
DOW 17,719.66 -26.32 -0.15%
S&P 500 2,107.18 -1.45 -0.07%
NASDAQ 5,136.3460 +7.5610 0.15%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs