And of course, its exports of iron ore, soybeans, sugar and coffee will benefit from an upturn in the global economy.
Landesman has taken big positions in Petrobras, which in the past couple of years has found huge deep-water reserves off the Brazilian coast that could someday transform the country into a major oil producer. He also likes Cosan, a leading global producer of sugar and ethanol, and Banco Bradesco, a leading private-sector bank.
The Russian Bear (Market)
Russia, as is its wont, is a conundrum. "I think BRIC is misleading in several ways," Riedel says. "First, the inclusion of Russia in there is totally inappropriate. One of the main reasons to invest in emerging markets is to take advantage of large, young populations where nascent business opportunities and business models can result in hypergrowth. When you have these things, you can get an outsized return on investment.
"Russia basically has none of those things going for it," he continues. "When you buy Russia you're buying into a population that's shrinking and where life expectancy is falling, and into an economy that's dominated by energy."
As the world's second-largest oil exporter behind Saudi Arabia, Russia was awash in rubles as oil prices soared to nosebleed heights by mid-2008. The global economic boom created huge demand for its vast trove of metals and minerals, too.
But then the worldwide meltdown devastated Russia's commodities export-heavy economy. Industrial production fell by almost 60%, the ruble fell roughly 45% against the dollar, and the country had to dig deep into its foreign reserves (much of which came from commodity exports) to support its currency. Meanwhile, the Russian equity markets plummeted roughly 70%, far outpacing the average global decline of 45%.
And the ham-handed Russian government hasn't helped matters. Its invasion of Georgia last summer, its continued interference with its gas supplies to Europe and the chronic meddling in its own domestic economy make Russia a geopolitical loose cannon and an unreliable economic partner.
"I think what we have in Russia is strictly a reflection of oil prices," Ezrati says. "There are many other ways to be long on oil rather than doing it with a less-than-honest regime." He, like many observers, believes Russia has done a poor job diversifying its economy from a reliance on oil, gas and other commodity exports.
Others are more bullish, even if the country's GDP is forecast to fall nearly 6% this year, down from last year's growth rate of 5.6%. "Yes, commodity exports have been a boon to the Russian economy, but there are also significant exports of machinery and equipment, in addition to consumer goods to neighboring countries," says Mark Mobius, head of Templeton Asset Management's emerging markets group. "Domestic demand in the economy still represents a larger part-over 50%-of the GDP."
Mobius also cites the Russian market's valuation--at a recent price-to-earnings multiple of less than 6 times trailing earnings--as a selling point. That's less than half the multiple of the Brazilian and Chinese markets, as well as that of the overall MSCI emerging markets index.