CIVETS is an acronym, reportedly coined by Michael Geoghegan at HSBC (NYSE:HBC), for Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. Investors may think of this as a second-generation of emerging economies, as these countries generally have fast-rising (and young) populations, relatively well-established financial infrastructure, internal stability and a pathway towards significant economic growth and potential co-leadership in their economic spheres.
Keep in mind, though, that not all of these countries posses these qualities to equal levels. What's more, none of these countries is so stable or well-established that back-sliding and disappointment could not occur. Corruption is still a significant problem in many (if not all) of these countries, and investors should not over-estimate the openness of these markets or the ease of investment. In others, an investor's options will be limited in comparison to a more-developed country like South Korea or even China and Mexico.
Of course, an assemblage of names like this is always at least a little arbitrary. Egypt, for instance, seems to have more value as a vowel than as a peer member of this group. Along similar lines, investors may find countries like Poland, Hungary or Sri Lanka to be more intriguing, even if they do not lead to a clever-sounding acronym. Accordingly, country-by-country economic due diligence is vital unless investors want to spread their bets across the entire group. (Find out how these worldly offerings can spice up your portfolio. Check out Go International With Foreign Index Funds.)
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