Every year there seems to be one or two “hot stocks” that grace the cover of investing magazines. Uranium, biotech and dot-com were buzz words that were synonymous with quick wealth and skyrocketing returns. Like any investing sector, some stocks in these areas were true winners and others were duds. One of the more recent acronyms floating around is the concept of BRIC investing. BRIC is simply a catchy way of talking about 4 emerging-market countries: Brazil, Russia, India and China.

“What’s the big deal with these countries?” some investors may ask. To put it simply, there is a major shift underway in the manufacturing and labor markets in the world, and the BRIC countries are the major players.

All four of these countries are rapidly growing in both economic power and individual wealth per person. China, for example, has a billion people, which is about four times the size of the United States. However, the average annual income in China (about $1,500-$2,500 US per year) is much lower than an American’s average annual income (about $50,000 US). China is seeing an increase in their “middle class” and as a result, luxury items (such as cell phones, high-end clothing, plasma television sets and even automobiles) are starting to become more commonplace. Disposable income is on the rise.

Similar situations exist (although to different extents) in Brazil, India and China. Two of the countries—Brazil and Russia—have huge natural resource deposits. The other two countries—India and China—have huge populations with increasing disposable income, rising education and a growing appetite to provide services and an ever-increasing skilled workforce into a global economy. It’s been estimated that these four countries’ economies could outpace the U.S. and become the world leaders by 2050.

Investor’s can play the BRIC countries in a number of different ways.

BRIC ETFs: The easiest way to play BRIC is to buy an ETF. There are a few of them available—make sure to check the prospectus to see which companies and what weighting for countries is included. Examples of such ETFs are the Claymore BRIC ETF (on the TSX) and also iShares MSCI BRIC ETF.

Individual ETFs: If you are unhappy with the weighting of BRIC ETFs, consider buying the individual ETFs for each country. Some investors actually think that mutual funds might be better in this situation, since there are many companies that may be less than stellar in these emerging, riskier markets, while others feel that the diversification and lower fees make ETFs a better choice. These individual markets are somewhat riskier than going the BRIC route (because any one country is riskier than all four put together—less diversification).

A word of caution: The China market has exploded over the past two years and many investors have voiced concerns that the Chinese government is keeping the market artificially high because of the Beijing Olympics next summer. The conspiracy theory is that there will be no bear market in China until just after the Olympics, and when the eyes of the world turn away after the closing ceremonies, the market there will nosedive. Others have commented that this is a “chicken little, sky is falling” attitude and that the incredible growth in these countries is just really starting.

The time horizon for a BRIC investment is very long term and these are quite volatile markets. One strategy is to put 10% of your portfolio into BRIC and not touch it for 20 years. If some strategists are correct, this could be all you need to retire—if the growth of BRIC countries continues to explode.

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