Few investing concepts have been as catchy as BRIC, the acronym for the cluster of leading emerging market countries Brazil, Russia, India and China. When Goldman Sachs coined the term in November 2001, it predicted the BRIC nations would contribute more than 10% to the global gross domestic product by decade's end. By November 2007, they accounted for 15%.

And each country's equity markets produced eye-popping returns during that period-Brazil returned 369%; India, 499%; and Russia, 630%. Chinese "H" shares traded in Hong Kong returned 817%, according to Goldman Sachs.

But the BRICs crumbled last year as markets tanked worldwide. The slide continued into early 2009, but then these nations regained their mojo in the global rally that began in early March. The iShares MSCI BRIC Index fund, for example, zoomed 48% through the end of May.

BRICs are back, but not necessarily badder than ever. Two of the countries expect to see slower growth rates this year, and the other two face economic contractions. And each member faces its own assorted challenges and opportunities. What's more, some strategists see BRIC as a passé concept that's not the best way to play emerging markets.

"BRIC is more justifiable as a journalistic concept than as an investing concept," says Milton Ezrati, senior economist and marketing strategist at Lord Abbett. "Why limit your diversification?" Latin America is more than just Brazil, he says. There are also solid markets in Chile and Mexico. And Asia has numerous markets to invest in beyond China and India.

But others still buy into the BRIC story. "They are the foremost emerging market countries no matter how you stack it," says Uri Landesman, head of global growth strategies at ING Investment Management.

More Than The Big Two
Many people see Brazil as a commodity export story. At least investors in the iShares MSCI Brazil Index fund might see it that way, since almost 40% of the fund is represented by just two companies--state-controlled oil company Petroleo Brasileiro (Petrobras) and iron ore mining giant Companhia Vale Do Rio Doce (Vale). That type of concentrated risk hurt the fund last year, dragging it down by 56% when these two companies got hammered by the global recession.

The overall Brazilian market dropped 42% last year. Industrial production fell 14.5%, and falling exports created the country's first trade deficit in eight years. In 2009, International Monetary Fund forecasts call for GDP contraction of 1.3%, down from last year's 5% growth rate.

Nonetheless, some people think Brazil is a great long-term story with the vast potential of its domestic economy. Its exports represent only about 13% of the economy, the country is self-sufficient in food and fuel, and it's a net creditor to the world.
Ezrati says Brazil has launched stimulus programs of tax cuts and industrial support, while the central bank has held steady with the benchmark interest rate at 13.75%. It's a high rate, but he says it signals Brazil's intent not to resort to the inflation financing that plagued the economy in the past.

On the consumer side, sales of white goods and electronics have grown at a compound annual growth rate of 45% since 2003. "Brazil is a very diverse and dynamic domestic economy where the real story is the emergence of the consumer middle class," says David Riedel, founder of Riedel Research Group, an independent equity research firm focused on emerging markets. "That provides immense opportunity."