Are you MINTed as an investor, or are your shares falling like a BRIC?
Keeping up with fund manager shorthand for investment classes is almost as hard a job as picking the right stocks.
So if you don’t know your tigers, bears and bulls from CIVETS, here are some handy tips.
MINT, BRICS and CIVETS are abbreviation for emerging market investments –
- MINT is Mexico, Indonesia, Nigeria and Turkey
- BRIC is Brazil, Russia, India and China
- CIVETS is Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa
But investing by sound bite is coming under fire as fund managers consider making up a catchy name for a group of investment opportunities that offer little more than a broad spectrum of economic performance is a misnomer.
Lack of connection
In most cases, few of the countries grouped together are even on the same continent or are experiencing the same social and economic issues.
Take the MINT countries. Mexico’s economic fortunes rest on neighbouring USA, Indonesia similarly is a cheaper labour source than China, will Nigeria is oil-rich and Turkey is on the fringes of Europe and a would-be member of the European Union.
While Turkey is tackling alleged rife corruption, Nigerian politics are a shambles with forthcoming elections and Indonesia is seeing investors flee as the current account deficit grows.
“Mexico, Indonesia, Nigeria and Turkey interesting countries but not much connected other than having an acronym,” said Richard Titherington, chief investment officer of emerging equities at JP Morgan Asset Management.
Titherington prefers groupings by concepts such as markets where companies offer the highest dividend yields.
Grouping by demographics
He points out that BRIC investors have realised economic growth may not convert into stock market gains, while some analysts blame corporate governance problems are strangling markets in Russia and China.
Grouping BRIC and MINT countries is really latching on to the demographics of countries expected to grow rapidly over the next 30 years, mainly due to their young populations.
Depending on demographics to make investment decisions is risky, explains Andrew Brudenell, frontier fund manager at HSBC Asset Management.
He advises investors should look to nations with weaker corporate regulation and relatively low levels of goods and services are available, which might offer potential for growth.
“Demographics are definitely one investment criteria, the others are also criteria,” Brudenell said. “We would not necessarily decide MINT countries are worth investing in when considering other criteria, there are lots of other better candidates.”