The Best & Worst BRIC Country ETFs

Overall the emerging markets have lagged the U.S. market greatly in 2014 as they are down on the year versus a double-digit gain for the S&P 500. The Guggenheim BRIC ETF EEB has lost 4 percent in this year and has not been able to rebound after the global market sell-off in September.

When delving into the emerging market asset class there is a major divergence between the winners and the losers. Since the end of June the best performers has been the iShares S&P India Nifty 50 Index ETF INDY with a gain of 8 percent. The election results that sent the country’s stocks soaring earlier this year continues to be the catalyst for higher stock prices. The pro-business government should be able to allow the populous country to prosper.

Another BRIC country, China, has also been a leader during the second half of the year. The iShares FTSE/Xinhua China 25 Index ETF FXI is up 6 percent and hit a multi-year low in mid-September before the selling began. The soft landing concerns remain for the country, however the growth is still robust and the valuations have come to levels that make the country attractive.

On the other end of the spectrum is the disaster that is Russia. The Market Vectors Russia ETF RSX is down over 20 percent since the end of June and is trading near a multi-year low. The issues began with the Ukraine situation and have been exasperated with the sanctions against the country in conjunction with falling energy prices and a tumbling currency. At some point the country will trade at a level that is too low and there will be an opportunity. That being said, it appears to be a falling knife at this point.

Finally there is the iShares MSCI Brazil Index ETF EWZ, which is down 16 percent during the second half of the year after a disappointing election result that saw the incumbent reelected. The long-term trend for EWZ has been ugly as the downtrend has been intact for the most part since 2008. Declining commodity prices, a president that is not business savvy, and slowing growth in China all lead to future issues for the country.

A decade ago it was as easy as throwing darts with the BRIC countries; it is amazing how things change so quickly. Investors must now be cautious moving forward and beware of trying to catch falling knifes.