The idea of investing in nations that are not mainstream, like the Civets, may be appealing to many in theory but investors need to look beyond the headlines and get a real handle on the markets involved before taking a punt.
As an example of what type of countries HSBC is looking to invest in, we take a look at Columbia, which initially takes 16% of the fund, and somewhere many would have considered it mad to invest not that long ago.
HSBC believes that the Colombian government is helping the South American country grow into a prosperous economy.
It says that the pro-business policies of Colombia's government are supporting the nation's economic revival, for example it has made efforts to invest oil revenues in the country's infrastructure and in job creation.
As a result, Colombia has become a key destination for foreign investment and development in Latin America.
One example of a company the fund is investing in via Colombia is Ecopetrol. It is the largest integrated oil company in Colombia and owns oil fields, refineries, pipelines and ports throughout the country. HSBC states that the firm is very cash generative, enabling it to continue to invest significant capex for future growth.
Another example is Bancolombia, the largest private sector bank in Colombia. HSBC believes that investing in the firm will enable them to benefit from the country's economic growth and it has a strong and consistent ROE track record.
