Ethical Investors: Investing in BRICS Nations May Help Reduce Inequality

The iShares Core MSCI Emerging Markets IMI Index ETF (TSX:XEC) offers Canadian investors a diversified play for growing foreign markets.

Green energy is one of the first investment areas that comes to mind when one thinks of ethical financial portfolio building. But investing in emerging markets can provide philanthropic investing options, too, while also bringing exposure to some highly lucrative foreign markets.

While the growth rates required to eradicate poverty are, in many cases, too high to be plausible, the fact is that the possibility remains for economic growth while raising the living conditions for the poorest countries. Investors in first-world countries such as Canada have an opportunity, then, to do their bit for the global populace simply by making ethical investment decisions.

If you don’t have enough foreign exposure, here’s a good place to start

One way in which domestic investors may be able to make a difference, albeit in a very small way, is to buy into emerging markets. By adding more liquidity to these economies, structures being put in place to benefit the poorest communities gain much-needed funds, while the sturdiest businesses are given a change to grow and reinvest.

An obvious choice for BRICS (Brazil, Russia, India, China and South Africa) and BRICS-type exposure is the iShares Core MSCI Emerging Markets IMI Index ETF (TSX:XEC). With a spread of markets that encompasses the BRICS nations as well as similar emerging economies, the iShares Core MSCI Emerging Markets IMI Index ETF can help Canadian investors share their wealth, while also opening a diversified channel for capital growth.

If you are a little light on international exposure, especially to BRICS-type markets, why not consider this diversified emerging markets ETF offered by BlackRock Canada. With a modus operandi of seeking long-term capital growth by mirroring the performance of the MSCI Emerging Markets Investable Market Index, this ETF could be just the ticket if you want to invest in the future of growing foreign markets.

How does an emerging markets ETF operate in the real world?

With a trailing 12-month yield of 2.26%, the iShares Core MSCI Emerging Markets IMI Index ETF works pretty much like any other ticker on the TSX. It offers a medium- to high-risk play on emerging markets, with much of that risk spread across a vast geographical area; this makes it just right for any investor too heavily exposed to North American markets.

The current exposure of the top 10 weighted markets on the ETF shakes out something like this:

  • China: 28.80%
  • South Korea: 15.45%
  • Taiwan: 13.03%
  • India: 9.22%
  • South Africa: 6.10%
  • Brazil: 5.86%
  • Russian Federation: 3.29%
  • Mexico: 3.17%
  • Thailand: 2.67%
  • Malaysia: 2.54%

As you can see, the spread of markets takes in several continents, including much of Asia as well as Africa, both North and South America, and, of course, Russia. Many of these markets offer investors considerable growth, and the chance for some serious capital gains, all funneled through a single convenient dividend.

The bottom line

If you’re building an ethical portfolio and need foreign exposure, the iShares Core MSCI Emerging Markets IMI Index ETF is a strong play. Consider adding alongside climate change-combating stocks such as Northland Power and Polaris Infrastructure, or similar green energy stocks, as well as any of the more forward-thinking food security stocks, such as Nutrien.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool owns shares of Polaris Infrastructure Inc. Nutrien is a recommendation of Stock Advisor Canada.

More on Investing

Target. Stand out from the crowd

2 Canadian Stocks I’m Buying Lots of This Year

I’m looking to snatch up exciting Canadian stocks like VieMed Healthcare Inc. (TSX:VMD) throughout 2023.

Read more »

grow money, wealth build
Dividend Stocks

Got $3,000? 3 TSX Growth Stocks to Buy in January 2023

Top TSX growth stocks that look appealing for 2023.

Read more »

woman data analyze
Dividend Stocks

Need Passive Income? Turn $15,000 Into $851 Annually

This passive-income stock is already climbing higher, up 16% in the last three months! Yet it's still valuable, so you…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 3 Reliable Canadian Dividend Stocks to Buy Now for Passive Income

Top TSX dividend stocks now appear oversold.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.

2 TSX Stocks Safer for Investing in a Recession

These consumer companies will likely beat the broader market averages amid a recession. These stocks offer stability, income, and consistent…

Read more »

Dividend Stocks

For $100 in Passive Income Each Month, Buy 1,500 Shares of This REIT

REITs such as Northwest Healthcare can enable investors create a passive-income stream as well as benefit from capital gains.

Read more »

A colourful firework display
Dividend Stocks

2 Canadian Growth Stocks (With Dividends) to Start 2023 With a Bang

Here are two of the best dividend-paying Canadian growth stocks you can invest in at the start of 2023 and…

Read more »

sale discount best price
Dividend Stocks

4 Insanely Cheap Canadian Stocks to Buy for Passive Income

The recent bear market has created some incredible bargains, especially for those looking for passive income. Here are four cheap…

Read more »