There is an old saying on Wall Street that, “Mutual funds are sold, not bought.” This phrase can easily be applied more broadly to the investment world. Few investors are in a true sense, self-starters in that they seek out novel investment ideas. Most of us are in actuality following the recommendations of one outside source or another.

The BRIC phenomenon is a perfect example of this. While there are some good common reasons why one might group the BRIC countries together, it is not altogether clear why one might need a BRIC fund, including two separate BRIC ETFs (EEB, BIK).

Justin Fox at the Curious Capitalist weighs in on the BRIC phenomenon. He wonders whether this is really more of an “IC” phenomenon. In particular he sees some serious differences in the sustainability of what is happening in Brazil and Russia versus India and China.  In short,

BRICs, I fear, may be a great acronym in search of a corresponding economic reality. ICs doesn’t look or sound nearly as good, but that’s where the real action is.

Felix Salmon at Market Movers points out that the BRIC phenomenon was always more of an investment thesis than a macroeconomic thesis.  In that he is correct.   With China looking more like a bubble, Salmon notes the attraction of the “likes of CVRD and Gazprom.”*

Has the BRIC investment meme worked out?  So far, so good.  That is not the issue.  Just because something  works out, does not mean it was a solid idea to start with.

One of the principles behind emerging market investing is that it is a good portfolio diversifier.  We still fail to see why, in a strategic sense, a BRIC fund is a superior diversifier than a fund made up of a broad-based basket of emerging markets.

*For more you can check out a recent article by Allan C. Nichols at Morningstar.com that takes a closer look at the  companies that make up Russia’s telecom industry.