R.I.P. BRIC

BRIC just officially died. Goldman will hold the funeral.

Bloomberg:

The BRIC era is coming to an end at Goldman Sachs Group Inc.

The bank’s asset-management unit folded its money-losing BRIC fund, which invests in Brazil, Russia, India and China, and merged it last month with a broader emerging-market fund. Goldman Sachs pulled the plug on the nine-year-old product because it doesn’t expect “significant asset growth in the foreseeable future,” according to a filing to the U.S. Securities and Exchange Commission.

Fourteen years after former Goldman Sachs economist Jim O’Neill coined the acronym that ushered in an unprecedented investment boom, the biggest emerging markets are now sputtering.

The downfall of the BRIC fund, which had lost 88 percent of its assets since a 2010 peak, also underscores how the strategy of bundling disparate countries into a single investment theme is losing its appeal among investors.

I gave an interview to Eric Balchunas about why the bundle just doesn’t work or make sense anymore.

“There is no difference between Portugal and Spain. Portugal is like diet Spain. But, there’s a huge difference between Russia and India. One is a commodity exporter, one is an importer. Their demographic trends are racing in different directions. This is why I bet we smash the BRIC idea completely. The whole idea of EM/DM has very little to do with each other. We only own them in a packager because it is easy. But it is probably not the best way to invest.”

Investors have been slowly figuring this out and using single-country ETFs for their EM exposure more than they’re doing the Brazil, Russia, India, China four-pack.

Sources:

Goldman’s BRIC Era Ends as Fund Folds After Years of Losses (Bloomberg)

ETF Investors Are Unbundling Emerging Markets (Bloomberg)