Excel BRIC Fund Commentary

As of November 30, 2011

For the month of November, the MSCI BRIC Net Total Return Index returned -5.9% in Canadian dollar terms.

Market Synopsis
Increasing concern over a global economic slowdown triggered by the ongoing sovereign debt crisis in Europe weighed on BRIC equity markets in November.  This despite the rebound in October, as strong corporate earnings and optimism surrounding the European Union (EU) summit led investors to return to equity markets globally.

Among the BRIC economies, gains were strongest in Brazil and Russia, and reasonably strong in China.  India’s economic picture was more modest. One bright spot in the BRIC economic picture is that inflation figures coming out of China show that inflation in that country may have peaked and we believe that the Central Bank has room to ease up on monetary tightening.  This should provide support for the domestic economy.  As China has been leading the world in economic growth rates, the expectation is that a buoyed China should also provide lift to the global economy at large.

Fund Positioning
The Fund’s holdings at the end of the month were about 31% in China, 18% in Emerging Europe, 26% in India and 17% in Latin America.  This leaves the Fund well positioned to take advantage of the strong growth projections for the BRIC economies in general, and India and China in particular.

Market & Fund Outlook
According to the IMF, BRIC economies are likely to continue growing at a substantially faster rate than developed countries, with GDP growth rates that are double the growth rates for developed economies.  In addition, the BRIC countries have more foreign reserves and lower debt-to-GDP ratios than many developed countries. BRIC equity market valuations do not fully reflect these positive factors.

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