Mark Collins – The BRICS Drop

Not much financial there there anymore:

Sun has finally set on BRICS funds

The BRICS are dead as an investment concept and their days as an influence-wielding bloc of key emerging countries may also be numbered. It’s been long overdue.

Goldman Sachs, the Wall Street powerhouse that gave the world the catchy, marketable acronym 14 years ago, has fittingly put the last nails in the coffin. Its asset-management arm quietly closed its shrinking BRIC equity fund in September and shifted the remaining assets into a broader fund covering all emerging markets.

The move followed several years of losses and heavy withdrawals by worried investors, a fate shared by other emerging funds with the same theme. By the end, the nine-year-old Goldman fund’s assets had plunged nearly 90 per cent to a mere $98-million (U.S.) from their high in 2010.

The firm declared in a regulatory filing in September that it doesn’t see “significant asset growth in the foreseeable future.”

It’s hard to disagree with that. Any fund with an inordinate focus on recession-racked Russia and Brazil [see “Brazil Hit with Petrobras Corruption Brick“] and a slowing China is bound to be in troubled waters. Then there’s stagnant South Africa, a latecomer added to the group in 2010 – turning BRICs into BRICS – to pretend that the little club speaks for the entire emerging world. That only leaves India, which benefits most from a drop in oil prices and is growing at a decent clip of about 7 per cent annually. But it remains beset by a host of investor-deterring problems of its own [see “Chinese, Indian Growth Slowdowns“].

So the BRIC funds have been stuck with a barn full of turkeys, while a small handful of stronger emerging players such as Mexico and South Korea lie outside their scope…

Gobble, gobble.  More BRICS here.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds


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