Podcast: Investing beyond the BRIC countries

Many investors are looking for better returns beyond our borders in the emerging markets, which generally have low debt levels, young populations, and fast growing economies.  Investors often focus on the biggest emerging economies – Brazil, Russia, India, and China – but there are many other possibilities when looking for emerging market growth.  Here I’ll discuss two Latin American countries with excellent prospects for investors:  Colombia and Chile. [soundcloud url=”http://api.soundcloud.com/tracks/46620835″ iframe=”true” /]

Colombia has made huge strides against domestic terrorist groups during the last ten years under President Juan Manuel Santos and his predecessor Álvaro Uribe, and violence in the country has fallen dramatically.  Colombia has immense natural resources including oil, gold, and other mineral reserves, but had little investment in the 1990s and early 2000s.  Investment has picked up quickly in recent years and Colombia is set to grow 5% this year, making it one of the fastest growing economies in Latin America, and a leader in the emerging markets.

There aren’t many Colombian companies that trade on the US stock exchanges, but there is an exchange traded fund with ticker symbol GXG which trades in the US and tracks the FTSE Colombia 20 Index.  Colombia presents risks for investors – the security situation could deteriorate, for example – but the country’s growth prospects over the long term are excellent.

Chile is another promising country for investors, with GDP growth around 4-5% in 2012.  The country has huge copper reserves (it’s the world’s leading copper producer) in addition to other minerals such as gold and silver, and a big agricultural sector.  Chile also has lithium reserves near its border with Bolivia.

Chilean equities trade at a premium to other emerging market stocks, and for good reason.  Chile has very low levels of corruption, low inflation, and is a strong and stable democracy.  The country’s financial sector is one of the deepest in Latin America and several Chilean companies trade on the US exchanges, including banks Banco Santander-Chile and Corpbanca, and airline LAN.  Ticker symbol ECH, an exchange traded fund that tracks the MSCI Chile Investable Market Index, is a good option for investors looking to add exposure to Chile.

Emerging market stocks can be volatile but undoubtedly many opportunities exist in that sector.  And there is much more to the emerging markets than Brazil, Russia, India, and China.

Brandon Fitzpatrick is an equity portfolio manager at DB Fitzpatrick & Company, a Boise-based registered asset management firm.  Please contact him with further questions if you would like discuss a particular topic for future podcasts.  You can follow him on Twitter.   His email address is [email protected] and his phone number is 208-342-2280.

This podcast is for informational purposes only, and is not a solicitation to purchase securities.