The BRICs acronym (Brazil, Russia, India and China) was coined by Goldman Sachs' economist Jim O'Neill in 2001 to represent a group of powerhouse countries that would drive global growth. BRICs became an investible theme with Goldman and others launching BRIC funds.
But the BRICs have since crumbled. Sharply diverging economies, split further apart by plunging oil prices and governments that have rolled out serious structural reforms, show that the BRICs have little in common.
Some analysts, like Kevin Gardiner, Rothschild Wealth Management's global investment strategist, said treating the BRIC nations as a single investment bloc "was a triumph of marketing over economic analysis”.
Koch, who has worked closely with O’Neill over the years, disagrees.
“We can answer that by looking at what we advise clients to do with their capital," Koch told our sisterm publication Fund Selector Asia on a recent trip to Hong Kong.
"We recommend putting at least 10% of equity assets into the global emerging markets, and BRICs should be 50% of that [10%]. We continue to think they are very important in terms of global growth and equity market returns.
“If you invest in global emerging market funds, you've got a lot of BRIC exposure. In fact, about 50% of the global EM universe is BRICs," Koch, who is based in New York, told FSA during a recent trip to Hong Kong.
Koch declined to say specifically whether she believes the BRIC countries continue to be a standalone investment theme on their own.
“BRICs will continue to be an investment theme, and some of our clients may want to overweight those countries individually or together. Our asset allocation recommendation for our clients is to have a strategic allocation to broader emerging markets, which include the BRIC countries."