Despite a slack performance by the iShares MSCI Brazil Index (NYSEARCA:EWZ), which is off almost 4.5 percent for the year, the four major country-specific ETFs tracking the BRIC nations have performed well as a group.
The other three ETFs are the iShares FTSE/Xinhua China 25 Index (NYSEARCA:FXI), the WisdomTree India Earnings Fund (NYSEARCA:EPI) and the Market Vector Russia ETF Trust (NYSEARCA:RSX). Throw in EWZ and the average return for that quartet of BRIC ETFs is 9.1 percent. That is solid, but not aw-inspiring, particularly when the far less volatile SPDR S&P 500 (NYSEARCA:SPY) is up 13.4 percent.
The 2012 picture for BRIC ETFs is a bit prettier at the small-cap level. Using the Market Vectors Brazil Small Cap (NYSEARCA:BRF), the Market Vectors India Small Cap Index (NYSEARCA:SCIF), the Claymore/AlphaShares China Small Cap (NYSEARCA:HAO) and the Market Vectors ETF Trust (NYSEARCA:RSXJ) would have generated an average return of nearly 11.4 percent across the four funds and that includes a loss of almost 11.8 percent for the Market Vectors Russia Small-Cap ETF.
If investors swapped out of BRF in favor of the iShares MSCI Brazil Small Cap Index (NYSEARCA:EWZS) and out of the SCIF in favor of the EGA Emerging Global Shares Trust (NYSEARCA:SCIN), the average return for a quartet of BRIC small-cap ETFs jumps to 14.3 percent. So split the difference between the two combinations – BRF, SCIF, HAO and RSJX and EWZS, HAO, RSXJ and SCIN and the average return between the two groups is about 13 percent.
Either way, investors that wanted exposure to each BRIC nation on an individual basis would have done better with small-caps ETFs than with large-cap equivalents. With just a few trading days left in 2012, the question is whether BRIC small-caps will continue outperforming in 2013. The answer should be addressed at the country level to start.