We cover three broad "BRIC" ETFs (short for Brazil, Russia, India & China):
- iShares MSCI BRIC (BKF)
- SPDR S&P BRIC 40 (BIK)
- Guggenheim BRIC (EEB)
Despite the funds' similar focus, there are substantial differences between them. BIK has heavy exposure to the Energy and Financial sectors (36% and 34%, respectively), and also has concentrated exposure to China at 45% of assets, crowding out the other BRIC countries.
EEB is the most diversified of the three by sector, but has over half of assets in Brazil. Meanwhile BKF, which still has sizable allocations to Energy and Financials, is probably the most diversified of the three funds overall. (BKF is the subject of this week's Fund Focus below).
The chart below shows that the three funds are not trading anywhere near the kind of price-to-earnings multiples they enjoyed prior to the global financial crisis. Even if this is said to be a new economic era, the stocks are still trading at about the middle of their post-2008 range. However, while there was some disparity between the funds previously, with BIK typically trading at a discount, all three funds have now converged at nearly identical P/E multiples.
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Chart: Historical P/E Ratios of BRIC ETFs
