Investors retreating from the economically pressured BRIC countries (Brazil, Russia, India and China) have become increasingly hungry for another flavor of alphabet soup.

Equity funds dedicated to the MIST markets (Mexico, Indonesia, South Korea and Turkey) took in a net fund flow of $786 million during the six weeks ending August 31, according to fund-tracker EPFR Global of Cambridge, Mass. Managers of big, diversified global emerging markets funds allocated another $909 million to the MIST markets during this period.

"Interest has taken off quite sharply," says Cameron Brandt, EPFR's director of research, who notes that the $786 million fund flow amount is equal to 4.6% of the total assets these funds had under management in mid-July. MIST fund flows climbed steadily from the start of 2009 into the third quarter of 2011 while BRIC fund flows have turned negative after leveling off in early 2010.

What's Fueling The MIST Mania?
 "We think these countries have exciting economic potential," says Anna Stupnytska, an executive director and macroeconomist with Goldman Sachs Asset Management. "One of the main drivers of this potential is [a] rising middle income class [in these countries] and associated consumption implications."

London-based Stupnytska works closely with Goldman Sachs Asset Management chairman Jim O'Neill, who coined the term "BRIC" back in 2001. Last year, the team started classifying the MIST economies as growth markets because each of the four now account for more than 1% of global gross domestic product.

Although Goldman Sachs says the BRICs will remain the main growth engine, it expects the MISTs to collectively contribute an additional $3 trillion to global GDP over the current decade (the U.S. is projected to contribute just under $4 trillion). The firm expects the MISTs and BRICs together to contribute another $15 trillion, two to three times that of the U.S. and euro zone combined.

 Globally, two billion people are expected to join the middle class between now and 2030, says Stupnytska. Mexico, Indonesia and Turkey are already seeing many cross this threshold-an annual income of $6,000 to $30,000 in U.S. dollars (controlled for inflation and purchasing power across countries).

The Goldman Sachs N-11 Equity Fund (named for the next 11 largest emerging markets after the BRICs) is trying to capture the rise in discretionary spending from the growing middle class, says Stupnytska and has an exposure of more than 20% to the consumer sector. Its top holdings as of June 30 included América Móvil, the leading provider of wireless services in Latin America (which makes up 7.9% of holdings). Another 5.3% are in Korean consumer electronics manufacturer Samsung Electronics. The fund also has large holdings in Turkish banks, a 3.9% allocation to Turkiye Garanti Bankasi and a 3.0% allotment to Akbank. Mexico-based beverage holding company Fomento Economico Mexicano makes up 3.1% of assets, and Korean carmaker Kia Motors represents 2.9%.

The fund's biggest country exposures as of June 30 were Mexico (which represents 24.0% of holdings), Korea (20.6%), Turkey (16.7%) and Indonesia (16.0%).

The Goldman Sachs N-11 Equity A fund (GSYAX) was up 13.71% for the year as of September 11, while the Goldman Sachs BRIC Fund (GBRAX) was up 3.31%. The N-11's benchmark is the MSCI GDP Weighted N-11 ex-Iran Index.