At the start of the noughties, some investors built their portfolios with BRICs – investing in the then emerging markets of Brazil, Russia, India and China. The past decade has worked out fairly well for them. However, several commentators believe that the BRIC markets are beginning to overheat and some investors are starting to look for new emerging market investment opportunities.
So is it time for investors to make a MINT? MINT stands for Mexico, Indonesia, Nigeria and Turkey and this group is being talked about as the new economic powerhouses in the emerging markets arena.
What the MINT economies have in common is very big populations. Indonesia for example has a larger population than Brazil and Russia. They also all have young populations, meaning that for the next 20 years or so, they will see a rise in the number of people eligible to work relative to those not working - all of which should lead to a rapid rise in domestic consumption.
Three of them also have geographical positions that should be an advantage as patterns of world trade change. Mexico, for example, is next door to the US, but also Latin America. Indonesia is in the heart of South-east Asia but also has good connections with China. And Turkey of course is in both the West and East. Nigeria could also fit the mould here in the future, if African countries get their act together and trade more with each other.
The upshot is that by 2050, according to World Bank/Goldman Sachs predictions, all four economies will feature in the top 15 in the world, with Mexico and Indonesia ranked at 8 and 9 respectively, above the UK, France and Germany.
However, whilst a good investment case can be made for each of these countries, investing in MINT economies could well represent a higher than acceptable level of investment risk for most investors.
Any investment in emerging market nations is a risky proposition. Whilst the BRICs are fast becoming established economies, the MINTs are still truly emerging markets and so should be treated with caution.
As well as the usual risks associated with equities, investors would be exposed to possible currency risk, liquidity risk and political risk.
Also, some experts believe that the MINTs are now looking pricy, in particular Mexico and Indonesia, whose stock markets hit record highs last year. This has put some investors off, as it is not currently a particularly attractive entry point. Others feel that investing in companies that benefit from the growth in these regions is a better option.
However, if you are keen to invest in the MINTs, experts see 10 years as a minimum, partly due to the likely share price fluctuations but also because time is needed to see the benefits of an expanding economy filter through to equity prices.
One approach might be to set up a regular investment plan, which discourages you from trying to time the market and limits the risk of losing money.
However, perhaps a better option might be to invest in a global fund, which has a portion of its money in the MINTs, but also has the majority in developed economies, such as the UK or US. Alternatively, you could go for a "tracker" fund that replicates the average share performance in these regions.