"Both from the standpoint of stocks and bonds, an investor wants to go where the growth is." - Bill Gross

The trouble with buying into hot investment themes is that sometimes we find out too late that the idea isn’t so hot anymore. And that seems to be playing out with one of the more fashionable concepts over the last decade or so: BRICs.

Back in 2001, Goldman Sachs strategist Jim O’Neil wrote an investment piece entitled “Building Better Global Economic BRICs”, which championed the investment potential of Brazil, Russia, India and China (or “BRIC” for short). Despite the fact that the four countries from three different continents are shaped by very different political systems, growth dynamics and even national sports, they were viewed by many as one homogeneous story. In fact, O’Neill was trying to represent the broader fast-growing, heavily populated emerging markets space. It reflected what was seen as a shift in global economic power away from the established powers to a new bloc. Little did he know the true impact of his acronym.

Some commentators added South Africa to the party to form “BRICS” - and you could as easily have thrown in the likes of Indonesia and Vietnam into the mix – as it was really a reflection of the outlandish growth dynamism seen within the emerging market space in the new millennium, aided later by the cheap money of quantitative easing.

And the story seemed to play out. Investors jumped into BRIC funds, growth boomed and investment into these parts of the world soared. It was no coincidence that these countries were also invited to host some of the major global sporting events for the first time – the FIFA Soccer World Cup in South Africa in 2010, Brazil in 2014 and Russia in 2018; the Summer Olympics in China in 2008 and in Brazil later this year; the Winter Olympics in Russia in 2014 and China in 2022.

The whole thing’s been like a coming of age movie. And as with any of these things, you get to see the growing pains in full flow. 2015 and 2016 have reminded investors that these markets still have a lot of growing up to do. Last summer China’s stock market implosion came under the spotlight. Trying to sustain 7%+ per year GDP was always going to be a tall ask, particularly when your government is looking to develop a brand new growth model based on consumer spending rather than the investment and exports one that had served you so well in the past. Unfortunately, the fallout from this has left many investors questioning whether these kinds of markets deserve their attention.

And it hasn’t been a great time for these countries of late. While India has held up relatively well, the economic environment has significantly impacted many of the leading emerging markets countries. Collapsing commodity prices have had a severe impact on Russia, Brazil and South Africa. As much as these countries have grown their presences on the global stage, they still have classic emerging market sensitivities to counter – too heavy a reliance on natural resources in their cases.

And when growth slows, the spotlight falls back onto how well the country is being run. In 2016 we’ve already seen calls for the impeachment of the presidents of both Brazil and South Africa, as accusations of corruption, money laundering and the misappropriation of funds hang heavy over both heads of state. Russia is once again getting used to its status as an international pariah – whether that’s over the country’s involvement in Syria and the Baltics states, or allegations of state-sponsored doping of its athletes. None of this has been good for their stock markets or provided peace of mind for investors still buying into the BRICs concept.

What all of this shows is that emerging markets still have risks. Plenty of risks. But does that mean investors should run a mile and stick to developed markets? No. Just looking at Asia, some 60% of the world’s population live in the region, with China and India accounting for 37% of the world’s numbers. The fastest growing consumer markets for everything from champagne to Gucci bags can be found in emerging markets. People here are still building lifestyles. They are new consumers. They are still emerging. And while there is always the argument for investing in some of these regions through companies with heavy exposure to them, it’s never the most “honest” way to approach emerging market exposure. It always feels like you’re missing out on some of the ride, both up and down.

The risks are certainly there but so are the returns over the longer term. That’s why investors get excited about these types of places in the first place. Given the global growth concerns and where we are with the commodity cycle at the moment, today may not be the best time to jump into some of these markets. But that time will come and these markets will come again.