Source: Bloomberg

Investors loved BRICs. Will they be equally fond of CIVETS?

In late 2003, Goldman Sachs coined the term BRIC, standing for Brazil, Russia, India and China. They were to be the great new economies and places to invest.

Now I see that HSBC is proudly announcing “the first CIVETS fund.”

CIVETS stands for Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. The term is variously credited to the Economist and to HSBC. One factor in choosing the countries is that they have young, growing populations, something the developed world lacks.

Maybe it should be called the ITS fund, with a CEV adjunct. Indonesia, Turkey and South Africa will each get a quarter of the money, based on initial plans. Colombia will get 16 percent, Egypt, 7.5 percent and Vietnam just 1.5 percent. (It sort of makes you wonder if Vietnam was added to provide a needed letter.)

The fund managers plan to give themselves maximum discretion. They may, or may not, decide to put up to a quarter of the money in stocks from “non-CIVETS nations which have similarly attractive demographics, such as Mexico, Nigeria, Philippines, Thailand, Malaysia and Saudi Arabia.”

How, you may wonder, have those baskets done? And how have they fared against what I will call the JUUG markets (Japan, United States, United Kingdom and Germany)?

Using the CIVETS weights in the news release, and weighting each of the others equally among the four countries, the above chart shows the results for two periods. The first is from the end of 2003, when the BRIC term was spreading, to the end of 2007, the year stock markets peaked. The second is from the end of 2007 through today. In each case, one leading market average was used for each country. The figures are calculated in dollars and come from Bloomberg.
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