September 16, 2010
Frankfurt & London – Goldman Sachs Asset Management (GSAM) today released a survey of perceptions of the BRIC countries among a representative sample of the German population. The study was carried out by TNS Emnid on behalf of Goldman Sachs Asset Management.
BRICs is a grouping that refers to the combined economies of Brazil, Russia, India and China. The concept was established by Jim O’Neill at Goldman Sachs in 2001. Goldman Sachs estimates that these countries will account for four out of the seven largest economies in the world by 2030.
The study released today shows that investors in Germany still have very small allocations to the BRIC countries. A total of 5.6 percent of those questioned have ever invested money in a BRICs fund.
Taking a five year investment perspective, approximately 30 percent of respondents believe that BRICs will generate less than five percent in returns, whilst just over 25 percent have a 6-10 percent return expectation. Only 6 percent of respondents believe that BRICs would generate returns in excess of 20 percent. During the last five years, BRICs have generated cumulative net returns of 134.74 percent according to the MSCI index*.
The survey highlighted a key reason for not investing in BRICs being investors’ perceptions of risk. Almost two thirds of those surveyed believe that BRICs are more risky compared to industrial countries; however the majority do not consider the potential growth in BRICs a “bubble”.
Commenting on the survey, Michael Gruener, Head of Third Party Distribution in Germany for Goldman Sachs Asset Management, said:
“This study shows a huge untapped potential. The BRICs have generated high returns over numerous years and are increasingly seen as the future engine of global growth. More and more German investors are now planning to seize the BRICs opportunity – but the majority are held back by lack of knowledge or fear of uncertainty. At Goldman Sachs Asset Management, we will intensify our efforts to highlight the risk and return characteristics of the BRICs so that investors can make an informed choice about this growing opportunity.”
Katie Koch, client portfolio manager for fundamental equities at Goldman Sachs Asset Management said:
“We believe that investors should closely examine the BRIC countries as arguably the fundamentals of the BRICs have never appeared stronger: balance sheets look robust, valuations can be viewed as attractive, and productivity improving. Looking ahead, we also believe that a number of demographic trends should favour the BRICs – including the youth of the population, the ongoing urbanisation, and the emergence of a middle class with spending power. We believe this could therefore present a good opportunity for investors to increase their exposure to the some of the world’s fastest growing economies.”
TNS Emnid surveyed 2,000 respondents in June 2010.
*As at end of June 2010
Goldman Sachs Asset Management is the asset management arm of The Goldman Sachs Group, Inc. (NYSE: GS), which manages $802 billion as of 30 June, 2010. Goldman Sachs Asset Management has been providing discretionary investment advisory services since 1989 and has investment professionals in all major financial centers around the world. The company offers investment strategies across a broad range of asset classes to institutional and individual clients globally. Founded in 1869, Goldman Sachs is a leading global financial services firm providing investment banking, securities and investment management services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
Roland Leithaeuser at Goldman Sachs in Frankfurt
Tel: +49 69 7532 2550