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Published on November 20, 2007

 People like Genesis' Mark Lightbown and Templeton's Mark Mobius had already got their feet wet as early as the beginning and the middle of the Nineties. But the BRIC (Brazil, Russia, India, China) fund is altogether a new trend.

Thailand too was soon catching up. Asset Plus Fund Management was the first to launch a BRIC fund, investing in the brand-name Templeton BRIC Fund. This was shortly followed by PrimaVest Asset Management, which has its feeder fund in Allianz BRIC Stars Fund.

Not to seem unfashionable, ING Fund too has introduced its first BRIC fund. But unlike the other two, the ING BRIC 40 Fund does not invest in any particular stocks.

Instead it invested in the American Stock Exchange-listed SPDR S&P BRIC 40 exchange-traded fund, via State Street Global Advisors.

Maris Tarab, ING Fund's managing director, said that by investing in structure notes linked to the S&P BRIC 40 index, investors have a fixed basket of pre-selected stocks. These stocks have to pass strict market cap, liquidity and listing criteria.

By allowing managers to invest in local markets with local currencies, the two other BRIC funds are exposed to much risk. Maris noted that the price-to-earnings ratio of Hong Kong Stock Exchange-listed H shares, at about 26, is much lower than A share's 55, which are listed in mainland bourses in Shanghai and Shenzhen, for instance.

But that does not mean that the other two funds will necessarily invest in local stocks.

Diversifying one's holdings can actually be a good thing. The BRIC 40 ETF has allocated 46 per cent to China, 25 per cent to Brazil, 23 per cent to Russia and the remaining 6 per cent to India - with a tilt towards the energy and financial sectors.

With a strategy of investing 80 per cent of funds in the ETF, the ING Thai BRIC 40 Fund might look like a slow Goliath incapable of swift manoeuvre.

Then again, investment sentiment for BRIC countries is on the rise and does not look like it is going to fall any time soon.

Ki Nan Tsui

 The Nation