NEW YORK ( TheStreet) -- Brazil, Russia, China and India make up the BRIC nations that have attracted much discussion and investment over the past few years.

The term BRIC came to fame in a report by Jim O'Neill for Goldman Sachs ( GS). and in subsequent research that argued the four countries could see their combined economies eclipse those of today's richest nations by 2050.

However, while these four nations could become a major force in the global economy, the term BRIC was the creation of an investment bank and these countries are not an economic union or political bloc.

There are some complementary aspects in their economies, such as Russia exporting natural resources and Brazil supplying the raw materials for growth in India and China, but beyond these similarities in the stage of development, they are four different countries. And as the performance of various ETFs shows, investors would be wise to treat of these countries separately.

One maxim of investing is diversification, especially if you know little about an area of the market. But in the case of BRICs, are investors really diversifying?

First comes the question of whether these four countries deserve to be grouped together. The fact that new BICK ETFs (swap Russia for Korea) may be on the way suggests that this is more about marketing than investing. More important, however, is the weighting of each country within the BRIC ETFs. Even investors who want to own the BRIC concept may not be getting what they want.

The oldest and largest BRIC ETF (first mover advantage continues to mean a lot in the ETF world) is the Claymore/BNY Mellon BRIC ETF ( EEB). Its B-R-I-C weighting is 57%, 3%, 11% and 29%, respectively.

The iShares MSCI BRIC Index Fund ( BKF) weighs those four at 35%, 14%, 16% and 37%, respectively, while the SPDR S&P BRIC 40 ETF ( BIK) allocates them as follows: 27%, 22%, 8% and 43%.

EEB is basically a Brazil-China fund. BKF is more evenly allocated, but it is underweight India and Russia. BIK has the most even allocation, but it is still heavily overweight China and underweight India. (One reason for the major underweight of Russia in EEB is that it tracks an ADR index and there are fewer Russian ADRs.)

Investors aren't getting an even split across the BRIC countries, and that's important because Russia and India ETFs have bested their Brazilian and Chinese counterparts this year. There are a few ways to deal with this situation, however.

One is to stay with a BRIC fund, such as BKF, but add Market Vectors Russia ( RSX) and WisdomTree India Earnings ( EPI) separately to even out the weightings. For instance, if you had 70% of your BRIC allocation in BKF and 15% each in EPI and RSX, the weight for each country would come to about 25%.

Another strategy is to build your own BRIC. By taking the aforementioned Russia and India ETFs and adding Market Vectors Brazil Small Cap ( BRF) and Market Vectors China Small Cap ( HAO) you can add exposure to small-cap stocks.

Year to date through March 22, the three BRIC ETFs -- EEB, BKF and BIK -- had negative returns of 1.6%, 0.3% and 1.7%. Matching BKF with RSX and EPI as outlined above would have resulted in a positive return of 1.2%. The build-your-own BRIC would be up 1.6%.

By substituting the small cap ETFs for the most popular large-cap Brazil and China ETFs -- iShares MSCI Brazil ( EWZ) and iShares FTSE/Xinhua China 25 ( FXI) -- the return would dip to 0.7%.

Finally, another strategy is to abandon the BRICs as a concept and stick with individual country ETFs where they make sense. Right now, India looks compelling because interest rates are moving higher after a surprise rate hike on Friday, but India's finance minister still expects GDP growth above 8% this year. Further increases should support the country's currency, a plus for foreign investors.

Russian stocks are also doing well, but the central bank is cutting rates to weaken the ruble and deter hot money flows. While this may be supportive of stocks in the short run, it is a headwind for foreign investors. In the long run, it's also likely to have unintended consequences. For the next few months, EPI seems the better choice over RSX.

I had picked HAO as the best China ETF for 2010 and so far that pick is panning out: HAO is up 4.6% this year, as of March 22. For investors looking for broad China exposure, this remains the best play.

-- Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion was long Market Vectors Russia, iShares MSCI Brazil.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.