Allianz RCM BRIC Stars
Brazil, Russia, India and China...
Brazil is already a major agricultural exporter – and could easily double its agricultural land without even touching the rain forest. Russia possesses huge oil and gas reserves and is one of the largest energy exporters in the world. The expanding Indian middle class now exceeds the entire population of the US and the rising affluence of this and the other BRIC populations is driving demand in many areas. China has already overtaken the US as the world’s second-largest exporter(1), driven in part by booming domestic demand within other emerging markets. Plus, China is now the largest mobile phone market in the world with around 520 million subscribers(2).
Many synergies exist in terms of supply and demand between the four BRIC countries as well as with other emerging market nations and beyond. In fact, we believe that six themes together are reshaping the entire global economic landscape – and Allianz RCM BRIC Stars is designed to target the BRIC investment opportunities at the heart of these themes.
The six key themes
We believe that powerful dynamics within the BRIC economies can be summarised in just six key themes:
Agriculture
As the domestic prosperity of the BRIC nations rises, their huge population is effectively demanding an improved place at the dinner table. Worldwide, demand for agricultural products is growing at more than double the rate of supply.
Infrastructure
All of the BRIC nations aspire to world-class economies and so require world-class infrastructure. The BRICs will see a total of $22 trillion spent on infrastructure in the next decade(3).
Energy
Despite worldwide energy demand, the production of oil may have already peaked(4) and, with the growing power of the BRICs, it’s now a question of which country wants to pay the most to secure its energy requirements.
Eco-technology
The growing worldwide draw on energy resources, fuelled by BRICs, makes ecotechnology an increasingly popular and cost-effective alternative.
Commodities
The demand for many commodities already exceeds supply – and the BRICs are exporters of many.
Emerging wealth
The rising prosperity of the BRIC populations is creating entire new markets to drive global economic growth.
Allianz RCM BRIC Stars targets opportunities created by these themes in companies in the BRIC economies and other emerging markets.
(1) CIA World Factbook, 2007. (2) BBC, 4/08. (3) Morgan Stanley research, 4/08. (4) Energy Watch Group, 10/07.
Important note
The markets in which this fund invests may be highly volatile and carry a higher risk both in terms of market and currency volatility which may result in dramatic fluctuations from time to time. Risks might also include dealing difficulties, settlement and custody practices and the market for some of the securities may be less liquid. Investments in emerging markets include investment in Russia. You should be aware that although the Russian Registrar Companies, that provide share registration services to issuers of Russian securities, are appropriately licensed in Russia, they may not be subject to the same stringent controls, as in other, more developed countries. This may mean that investors may not secure good title to the Russian securities held by the local Depositary. Hence, because of the potential for even greater volatility in such markets, there is a consequently greater risk of you not receiving back all/or any of your investment allocated to this market. The Fund will hold typically around 60 stocks. Lower diversification and active stock selection can result in greater than average investment in individual countries, companies or market sectors. Such concentration can give rise to more risk than where investments are spread over a larger number of countries, companies or market sectors. Whilst this may increase the potential gains, this concentration of exposure and lack of diversification may also substantially increase the risk of loss in the Fund. Past performance is no guide to future performance and the value of an investment and the income from it can fall as well as rise.
The BRIC economies are amongst the largest and fastest growing in the world, making the rationale for investing a persuasive one.