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Examining BRIC and "psuedo" ETFs

An interesting article, written by Michael Dawson and entitled, "Building a Better BRIC-Trap", examines the BRIC (Brazil, Russia, India, China) investment theme and offers advice on how to construct your own BRIC-focused investment portfolios.

Here's the meat of Dawson's approach explained:

Individual investors no longer have to wait on Wall Street’s products. Low cost brokers and basket trading have made it financially feasible and practical to create your own “pseudo-ETF.” Read my article on low cost basket trading for more details.

Currently, I am using two pseudo-ETFs to invest in the BRIC theme. The first is composed of stocks that provide raw materials and supplies necessary for the industrialization of the BRIC economies. The second is simply an equal-weighted basket of EWZ, TRF, IFN and FXI. I prefer this approach versus the Claymore, since I can control the allocations. So, if you only want broad exposure use the Wall Street products or a variation similar to mine.

That being said, I am in the process of reconstructing the second method. I believe in the long run more upside will be realized by addressing specific problems facing the BRIC countries as opposed to the broad-brush approach. So, the second ETF will be composed of stocks that address two major problems facing the BRICs – pollution management and logistics/transportation. I will address logistics and transportation in a subsequent article.

See the article for more on Dawson's approach and his picks for an infrastructure/logistics focused BRIC "ETF".

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