The BRICS countries – Brazil, Russia, India, China and South Africa – offer significant investment opportunities for European investors looking to diversify their portfolios. However, directly investing in these emerging markets also comes with risks and challenges. This article provides an overview of different ways European investors can get exposure to BRICS economies and key factors to consider.
Evaluate if BRICS match your investment goals and risk appetite
The BRICS markets tend to be more volatile than developed markets like Europe. While they offer higher growth potential, there are also greater political, economic and currency risks. As an European investor, evaluate if adding high-growth but higher-risk BRICS investments aligns with your overall investment objectives, time horizon and risk tolerance.
Research individual BRICS country prospects to target most attractive markets
The BRICS grouping contains very diverse economies at different stages of development. Do in-depth research on the economic and political outlook for each BRICS country to determine which markets currently present the best opportunities relative to risks. For instance, India and China may be attractive for their growth potential, while Russia and Brazil face more uncertainty.
Consider a BRICS emerging markets fund for broad exposure
Rather than picking individual stocks in each BRICS market, a diversified emerging markets fund focused on BRICS can provide a simpler way to gain exposure. These funds hold a basket of stocks from the top companies across BRICS countries, providing broad access while smoothing out some country-specific risks.
Invest in multinational companies with BRICS exposure
Many large global companies generate significant revenues in BRICS economies. Investing in these multinationals is a lower-risk way to benefit from BRICS growth. Look for European companies with major operations in India, China or other BRICS markets.
Weigh pros and cons of direct investment in BRICS stocks
Investing directly in Brazilian, Russian, Indian or Chinese stocks offers the highest BRICS exposure but requires researching individual companies and understanding each country’s investing regulations, currencies, and risks. If choosing to invest directly, partner with a local brokerage for easier access.
For European investors, adding exposure to faster-growing BRICS markets can boost portfolio growth potential. Carefully evaluate your risk tolerance and research prospects in individual BRICS countries to determine the right investment approach, from diversified funds to direct stock investments.