When you decide how to invest your money, especially if it’s in ETF’s from other countries, you don’t think that ethics has anything to do with your decision.

But you need to consider all the parts of an equation in order to be sure we’re making the right decision. When you invest money in another country, you practically show your appreciation to the way that country is handling its economy and, in a certain way, to the government ruling that country. The BRIC group is formed by Brazil, Russia, India and China and BRIC ETF’s were, in the last few years, on everyone lips.  An important question is if, from an ethical point of view, BRIC ETF’s are good investments.
China is a communist country and has big problems respecting basic human rights. Russia is an oligarchic and corrupt country and has shown they are not afraid to nationalize public companies assets. Brazil makes a strong point by the fact that it doesn’t need to import oil anymore- but that was obtain through cutting off the Amazonian jungle and planting sugar cane instead, for ethanol. India, on the other hand, is a very protected market; as a foreigner, you can’t invest directly in this country.  In these conditions, are you dispose to invest? These are not only ethical, but they also raise pragmatic questions. What makes you think that, if a country doesn’t respect the basic rights of their own citizens, will respect the money you invested?

When investing in BRIC countries, you should include in your risk analyze the rule of law in each of these countries. In India and China, land ownership rules are so lax that corporations can experience great expenses setting up shop only to be forced to relocate a few months later. In china, the idea about private property is very different from western countries and a to nationalize someone’s assets, whether we speak about a person or a company, in not out of the ordinary. Another big problem is the immature nature of each BRIC countries public stock exchanges. Even if providing opportunities to find many undervalued companies, these stock exchanges can be easily manipulated.

Investing in emergent markets will provide you big opportunities, but also big risks. BRIC ETF’s is still an important instrument for investing in those countries, but you need to ask yourself a question: will you be comfortable with your investments no matter what you hear on the news? Next time Russia invades a small country or China puts people in jail because they surfed the net, maybe you’ll wish to give up your BRIC ETF’s. The companies and the people from those countries are not guilty about the excesses of their government, but investing money in their economies is a way to keep those systems up and running.