BRIC countries look like long-term play

The emerging markets of Brazil, Russia, India and China are expected to generate long-term growth. “Emerging markets are the creditors to the world,” which bodes well for the sector as a long-term investment, said Derek Young, co-portfolio manager of the Fidelity Strategic Income, Fidelity Strategic Real Return and Fidelity Strategic Dividend and Income funds at Boston-based Fidelity Investments. Over the short term, investors still need to be cautious because interest rate changes and inflationary pressures could affect those economies. “The potential is there for a surprise, and if that surprise shows up, it could be negative. But the fundamentals are still extremely strong,” said Mr. Young, a panelist at the investment conference of Chicago-based Morningstar Inc. being held in that city this week. Inflation is also a threat to emerging-markets countries because of increasing costs for food and energy, and increasing wages. The unknown is whether governments will react by raising interest rates. “If they make a policy mistake, that’s the risk factor right there,” Mr. Young said.