Profit From the Fantastic Four

A number of major Russian companies trade in the U.S. as American depositary receipts. One reason Mayo likes Gazprom ( OGZPY.PK), the world's largest natural-gas producer and exporter, is that it stands to earn more as subsidized domestic gas prices rise toward world market prices. Gordon-James, co-manager of Aberdeen Emerging Markets, thinks oil giant Lukoil ( LUKOY.PK) is still cheap by international standards when measured on a basis of share price to energy reserves and considering how much the company can improve its operational efficiency. And when you invest in Gazprom and Lukoil, says Van Eck's Semple, you know you're on the right side of the Kremlin. "The government has a clear political agenda to create national champions in energy."

Solid companies

Viewed from the top down, the Indian picture is the least attractive among the BRICs. The Indian government runs large budget deficits, driving up interest rates and starving the private sector of capital. Moreover, rising prices for energy and food are exacerbating the deficits because the government subsidizes these commodities. The inefficient government has been too slow to build infrastructure, one of the main reasons that China bounded ahead of India in export-oriented manufacturing and the ability to attract massive foreign investment in factories.

The bottom-up view, however, is more sanguine. Among the four BRIC nations, India takes the prize for corporate and management quality. Aberdeen's Gordon-James says Indian managers tend to be savvy cost-cutters who focus on core businesses and high profitability. Corporate governance is generally sound, the century-old stock exchange is broad and deep (with more than 5,000 public companies), and the country has a long tradition of local shareholder ownership.

So it's hard not to be optimistic about this young, populous nation over the long term. One industry where India is already a leader is computer software. Companies such as Infosys Technologies ( INFY) and Satyam Computer Services ( SAY) are competitive exporters of information-technology services.

As wealth spreads, the middle class expands. Ranga Nathan, of Indus Advisors, a stock-index provider, puts the size of the Indian middle class at 250 million to 300 million, and he predicts that it will grow to 400 million to 500 million by 2020. Nathan says a high percentage of the population is between the ages of 20 and 40, a sweet spot for both production and consumption. "The whole aspiration curve in India is enormous," says Nathan.

The best way to tap into rising household incomes in India is through a mutual fund. Andrew Foster, of no-load Matthews India ( MINDX), says he's finding some of the best growth prospects in midsize companies that were formerly local in scope but are now going national. One of his favorite holdings is Dabur, a leading maker of fruit juices, biscuits and food supplements. He also likes HDFC Bank ( HDB) for its focus on credit quality in its corporate and consumer lending.

You can also access India's broad economy through two fine closed-end funds, both of which date from 1994 and sell at discounts to net asset value (NAV). Blackstone's Punita Kumar-Sinha manages India Fund ( IFN) from Boston. She's convinced that long-term investors will do better in India than in the U.S. because of India's rapid wealth creation, rising consumption and attractive demographics. Under Kumar-Sinha, India Fund returned an annualized 23% on its assets over the past ten years to June 2. In mid June, it traded at a 5% discount to NAV.

Morgan Stanley India Investment ( IIF), the other closed-end fund, is run by Morgan Stanley's Global Emerging Markets Equity Team. The fund recently traded at a 5% discount to NAV. If you prefer an indexed approach, consider PowerShares India Portfolio ( PIN), which tracks the top 50 stocks on the Indian exchanges.

The driving force

You couldn't spell BRIC without China. The country's fast-motion industrialization, urbanization and infrastructure construction are driving the global economy.

Theresa Gusman manages DWS Global Commodities. One of her favorite strategies in running the fund is to invest in companies that produce the stuff China needs: commodities such as oil, copper, iron ore, coking coal and aluminum. When you combine China's massive population with its frenetic economic growth rate, you have an equation that can roil world markets -- and provide some excellent investment opportunities.