The Four Largest Emerging Markets

Screen displaying stock charts
•••

 

Chuanchai Pundej / Getty Images

There are many emerging markets around the world, but the four largest are known as the BRICs (an acronym for Brazil, Russia, India, and China). Many investors believe that these markets are relatively stable and may eventually replace the G7 as the world's next next superpowers. This makes them essential for any international investor's portfolio.

Considerations

Before investing in the BRICs, investors should first familiarize themselves with emerging markets. With a little basic research, international investors can build a solid understanding of emerging markets and some of the ways to gain exposure to their economies.

  • Definition: The term "emerging markets" is thrown around a lot in the world of international investing, but it's difficult to pinpoint an exact definition. Instead, it is better to learn about the key characteristics of emerging markets, how to identify the most promising emerging markets, and the best way to build them into an international stock portfolio using ETFs and mutual funds.
  • How to Invest: There are many ways to invest in foreign markets and each method has its own set of advantages and disadvantages. Education yourself on the different options available and how to choose the best option for your investment portfolio.
  • Diversifying Your Portfolio: There are some benefits of investing in the BRICs using mutual funds and exchange-traded funds (ETFs). Unlike purchasing individual stocks and bonds, these securities are far easier to manage and offer greater diversification. Weigh the benefits and risks of investing in emerging market economies like the BRICs when including them in any portfolio.

The BRIC economies may all be promising emerging markets, but they differ greatly from each other in many key ways. International investors should familiarize themselves with each of these markets, the best ways to gain exposure to them, and ultimately make an informed investment decision.

Brazil

Brazil has experienced nothing short of an economic miracle over the past decade. In fact, the country is now the second largest producer of iron ore in the world and produces more ethanol than Asia and Europe combined!

Russia

Russia is commonly thought of as a Siberian desert, but it's one of the hottest investment destinations in the world. As a leading exporter of oil and natural gas to Europe, the country has benefited from the secular growth in commodities and continues to expand.

India

China is often cited as Asia's most promising economy, but India is a country that shouldn't be ignored. With its promising "demographic dividend" and significant farm output (second in the world), investors should definitely consider adding it to their portfolios.

China

China is expected to surpass the United States in size over the coming years, which makes it extremely important for any international portfolio. But given the country's government and controversies, it's important for investors to recognize some key risks. Discover how to quantify these risks and invest properly in this still rapidly growing emerging market economy.