Are MINTs the next big investment opportunity?
After the popularity of investing in BRIC nations (Brazil, Russia, India and China), Fidelity International is asking whether MINTs could be the investment opportunity of the next decade?
The past decade has been good to investors with exposure to BRIC markets.
With some fears that these economies and markets are starting to overheat, investors are understandably looking for new emerging market investment opportunities.
The MINT countries are Mexico, Indonesia, Nigeria and Turkey.
In a briefing note to investment advisers this week, Fidelity took a closer look at each of these four countries to see what they have to offer from an investment perspective.
Mexico has a very high economic exposure to the United States, which is both a positive and negative attribute for investors. Nearly 80% of their exports go across the border to the US and the country receives a large amount of US investment.
Indonesia is the most similar of the four MINT countries to the BRIC nations. It has a larger population than Brazil or Russia and an economic goal to become a top 10 global economy by 2025.
Nigeria features a gap between perception and reality, with images of poverty and corruption masking some of the opportunities for exciting investment opportunities.
Turkey has seen a robust economic recovery since the global financial crisis. It grew by an estimated 8.1% last year and has a banking system which is in relatively good condition.
Whilst there are good economic and investment cases for each of these countries, investing in MINT economies represents a higher than acceptable level of investment risk for most investors.
Any investment in Emerging Market nations is a risky proposition.
In addition to the usual risks associated with equity investing, investors must be prepared to accept currency risk, liquidity risk and political risk.
Whilst BRIC nations are quickly becoming established economies, the four MINT countries are truly emerging markets and must be treated with caution.
Now that Fidelity has coined the term MINT, the launch of a fund investing in these countries is probably not too far behind.
Rather than jumping on the latest investment bandwagon, investors should only invest in the latest fad with a purpose; the launch of a cleverly named fund is never a good enough reason on its own.