The financial world is full of acronyms. Almost everything from the New York Stock Exchange (NYSE) to select equity indexed notes (SEQUINS), have been reduced to a simple acronym.  Not only does this make long phrases friendlier and easier to use in everyday conversation, it can make or break an idea on the world’s stage.#-ad_banner-#

Take the simple four-letter acronym BRIC for example, which stands for Brazil, Russia, India and China. Coined 10 years ago by the chairman of Goldman Sachs Asset Management, Jim O’Neill, this acronym conveys strength and longevity to the related developing nations.

O’Neill chose to group these four countries as one name because each of the economies accounted, at the time, for more than 1% of the nominal global gross domestic product (GDP). These countries were also developing quickly enough to help support the global economy in the face of the forecasted European slowdown. O’Neill nailed this projection and the acronym took on a life of its own.

Just like the old EF Hutton commercials would say, “When EF Hutton speaks, everyone listens,” when Goldman Sachs speaks even world-class economies listen.

It’s not surprising that investors who got in at the start of the BRIC idea have profited handsomely. Now that BRIC countries are an established part of the new economy, O’Neill has grouped another four nations and launched a corresponding mutual fund to track their progress, as well as seven other emerging markets. The four largest nations in the fund are known as “MIST.”

Consisting of Mexico, Indonesia, South Korea and Turkey, these growth markets look like they may be the next big thing. This group of aggressive, striving nations generally frighten conservative investors individually, but O’Neill’s grouping creates confidence based on precedent.

Critics have brought up the point that the MIST nations lack many of the comparable characteristics that made the BRICs such an insightful grouping and thus should not be grouped together. This point is countered by the fact that the aggressive pursuit of GDP growth is the underlying connection that brings MIST together. In other words, it’s the traditional economic view point versus the one of visionary O’Neill.

My money would be on the visionary.

How can investors take advantage of this powerful investment opportunity?

There are two main ways: One cheap for the do-it-yourself investor, and another designed by Goldman Sachs, but costlier.

First, the cheap way
An investor could purchase an exchange-traded fund (ETF) exclusive to each one of the MIST nations. For example, Indonesia has the Market Vectors Indonesia Index ETF (NYSE: IDX). Mexico has iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW), while South Korea boasts the First Trust South Korea AphaDEX Fund (NYSE: FKO) and Turkey offers the iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR).

The Goldman Sachs way
The second but more costly way is to purchase the Goldman Sachs N-11 Equity Fund (NYSE: GSYAX). This open-ended mutual fund is designed to follow the nations O’Neill has identified as being among the next big 11 emerging markets. The MIST countries are the four largest economies within the N-11, representing 80% of the investment.

The downside of having Goldman choose your stocks is that it’s a front-loaded product with a hefty sales charge of 5.5% on top of 1.8% in annual expenses. The fund’s performance so far, however, seems to make the extra costs worthwhile. Shares have been in an upward trajectory since the start of June, making more than 11%. In other words, in just three months, the fund has paid its heavy expenses and is profitable for June and earlier investors.

Risks to Consider: These types of macro investments contain three main risk factors: political, economic and market. Political risk means a change in government structure or within the existing government could derail the investment. Economic risk, put simply, is the risk of the nation’s or global economy changing in a nonprofitable manner. Whereas market risk is the everyday risk one encounters when investing in equities of any kind at anytime. This isn’t mentioning the high hurdle of fees that needs to be surmounted each year to earn a profit with the Goldman Sachs N-11 mutual fund. All these factors combined can make this fund unsuitable for many investors.

Action to Take –> I have tremendous respect for O’Neill and his ideas. I like the N-11 mutual fund despite its high fees and costs. The high fees make sense in light of the fact that the underlying companies have been hand-selected by the proven professionals at Goldman Sachs. Not to mention, the fund provides greater diversification for the investor than simply buying ETFs of each of the MIST nations.

In other words, Goldman Sachs expertise is embedded into the fees. Only you can decide if this makes sense to you rather than investing in the countries via individual ETF products. I like the fund at these levels and can easily see it hitting $16 within 18 months. Remember, always use stops and position size properly.