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'CIVETS stands for Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. The term is variously credited to the Economist and to HSBC. One factor in choosing the countries is that they have young, growing populations, something the developed world lacks.

Maybe it should be called the ITS fund, with a CEV adjunct. Indonesia, Turkey and South Africa will each get a quarter of the money, based on initial plans. Colombia will get 16 percent, Egypt, 7.5 percent and Vietnam just 1.5 percent. (It sort of makes you wonder if Vietnam was added to provide a needed letter.)

The fund managers plan to give themselves maximum discretion. They may, or may not, decide to put up to a quarter of the money in stocks from “non-CIVETS nations which have similarly attractive demographics, such as Mexico, Nigeria, Philippines, Thailand, Malaysia and Saudi Arabia.”

How, you may wonder, have those baskets done? And how have they fared against what I will call the JUUG markets (Japan, United States, United Kingdom and Germany)?

Using the CIVETS weights in the news release, and weighting each of the others equally among the four countries, the above chart shows the results for two periods. The first is from the end of 2003, when the BRIC term was spreading, to the end of 2007, the year stock markets peaked. The second is from the end of 2007 through today. In each case, one leading market average was used for each country. The figures are calculated in dollars and come from Bloomberg.

In the first period, the CIVETS stocks performed almost as well as the BRICs. Both left the JUUGs in the dust. Since then, however, nobody has done much. CIVETS are up as a group because Colombia has leaped 77 percent and Indonesia 23 percent. But Egypt and Vietnam are down nearly half (Egypt) or almost two-thirds (Vietnam).

The lesson here may be that it matters when you latch onto a theory, and that chasing performance is dangerous. Since the end of 2007, the United States — that boring aging country — has done less bad (down 10 percent) than all but four of the countries in the emerging markets groups. In addition to Egypt and Vietnam, the better performers are Brazil, up 6 percent, and South Africa, up 5 percent.'
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