Goldman Sachs Group Inc. (GS) is folding its BRIC fund and merging it with a broader emerging market fund. The BRIC fund, which invests in Russia, China, Brazil, and India, has been losing money. In its filing to the SEC, the bank said that it doesn’t see the nine-year-old product experiencing “significant asset growth.” Unfortunately for some investors of the BRIC fund, depending on when you invested, you may have lost up to 88%.
The acronym for the fund comes from the names of the countries in which it invested. Goldman’s BRIC fund allowed investors to bet on growth in Brazil, Russia, India, and China. It was Goldman Sachs Chief Economist Jim O’Neill who invented the name, selecting the nations for their potential for growth and their importance to the economy some 14 years ago.
Following an investment boom, these large emerging markets are now starting to falter, as have investors’ previous gains. China is expected to experience its weakest expansion in 25 years and Brazil and Russia are going into recessions. While India has experienced growth, the nation’s prime minister is finding it challenging to put reforms into place.
Since undergoing a peak in 2010, the BRIC fund has lost 88% of its assets. Bloomberg reports that while the fund’s assets peaked back then at $842 million, by the end of September 2015, its assets were down at $98 million. Such a decline points to how investors are losing interest in funds that package different nations into one investment theme.
Also, according Bloomberg, this year alone up through November 4, investors have taken out $1.4 million from funds that were invested in BRIC nations. EFPR Global reports that since the end of 2010 that outflow is now at over $15 billion.
Goldman says the BRIC fund will be absorbed by the Emerging Markets Equity Fund as part of the firm’s attempts to get rid of products that overlap and to optimize assets. Goldman said the merger was the solution of choice, rather than liquidation, because investors will now gain access to an array of developing countries that are even “more diversified.”
If you are an investor that has sustained losses in Goldman’s BRIC fund, contact Shepherd Smith Edwards and Kantas, LTD LLP today and ask to speak with one of our securities lawyers.
Goldman’s BRIC Era Ends as Fund Folds After Years of Losses, Bloomberg, November 9, 2015
Goldman Closes BRIC Fund, Wall Street Journal, November 9, 2015