Emerging markets used to be a somewhat obscure niche of the international investing world. These rapidly developing countries play an increasingly important role in the global economic system. In fact, more than half of global economic growth is now driven by emerging markets. The BRIC (Brazil, Russia, India, China) nations alone account for roughly 30% of production globally. These countries have offered some spectacular returns over time. Other emerging markets are Mexico, South Korea, Colombia, Indonesia, Egypt, Turkey, and South Africa. Investors interested in betting on a rebound in Brazil have a wide range of options, ranging from exchange-traded funds to several large companies like oil producer Petrobras, which has a New York Stock Exchange-listed ADR. The largest Brazil ETFs include:
iShares MSCI Brazil Capped ETF (EWZ)Direxion Daily Brazil Bull 2X Shares (BRZU)iShares MSCI Brazil Small-Cap ETF (EWZS)
Some ADFs for Brazil are:
Banco Bradesco S.A. (BBD)Itaú Unibanco Holding (ITUB)Gerdau S.A. (GGB)
The Russian economy began a recovery in 2017, experiencing a 1.5% growth in GDP. However, Russia’s invasion of Ukraine in February 2022 sent the Russian economy into a tailspin. The country was dealt heavy sanctions by the international community. The largest Russian ETFs include:
Van Eck Vectors Russia ETF (RSX)iShares MSCI Russia ETF (ERUS)Franklin FTSE Russia ETF (FLRU)
The BSE Sensex index (a measure of continuously performing stocks) has come close to doubling since 2016, indicating good growth and confidence by investors. India’s large English-speaking population and technology-savvy firms such as Infosys Technologies have been molding India into an emerging market. The largest India ETFs include:
iShares MSCI India ETF (INDA)WisdomTree India Earnings Fund (EPI)iShares India 50 ETF (INDY)
The iShares China Large-Cap ETF is one exchange-traded fund that invests in Chinese stocks. Investors can participate in China through mutual funds, ETFs, and Chinese companies with listings on Nasdaq and the New York Stock Exchange. The largest China ETFs include:
Global X MSCI China Financials ETF (CHIX)Global X MSCI China Utilities ETF (CHIU)Xtrackers Harvest CSI 500 China-A Shares Small Cap Fund (ASHS)
The Next 11 list includes Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam. These are frontier markets that are risky by nature. Since these countries are developing, they are unstable and experience marketwide volatility. Frontier markets are a risk-heavy investment and should be considered only if you don’t mind the amount of risk that comes with them. These countries usually are commodity heavy, not transparent and are hard to find information on. Many of these countries are also politically unstable, as powers within the countries struggle to control commodities and resources. The returns could be significant, but investing in a frontier economy should only be an option for those with large, diverse portfolios that can handle the risk.
