BRIC funds, mutual funds composed of securities from the emerging economies of Brazil, Russia, India, and China, have been the subject of a lot of talk lately. Now a new instrument from Barclays Bank, the iPath MSCI India Index ETN (NYSE:INP), designed to match the performance of the MSCI India index, gives investors the opportunity to invest in a quarter of that BRIC with a product that functions like an exchange-traded fund.

What is an ETN?
When you buy an exchange-traded note, you are purchasing a senior unsecured debt note from Barclays, which promises to pay you the exact return of the underlying index. Like an ETF, there is also a brokerage commission that you must pay when you buy or sell -- INP carries a yearly fee of 0.89%.

ETNs represent a new product structure that Barclays has already used for three commodity-based funds. Although the IRS has not yet ruled, Barclays believes that shareholders in the new funds will never have to pay capital-gains distributions while holding the fund, so that their only tax liability will be when they sell the fund.

The next China
Since it's difficult to invest in India, many people may not bother with investment opportunities there. But with a gross domestic product that has averaged growth of 7% to 7.5% over the past few years and is expected to continue that rate of expansion going forward, this country might be well worth considering. Although the world seems to have focused more attention on China, India may surprise investors over the next few decades, and those investing in India might be rewarded. China, on the other hand, with such high expectations, may disappoint.

Although PowerShares plans to launch two India-based ETFs, there are only a small handful of India-focused funds currently available to U.S. investors. One option, the India Fund (NYSE:IFN), is a closed-end management investment company with an expense ratio of 1.49%. The Matthews India Fund (MINDX), another choice, carries an expense ratio of 2% and a $2,500 minimum. A third choice, the Eaton Vance Greater India A (ETGIX), has an expense ratio of 2.35%, a $1,000 minimum, and a 5.75% front end load. All three of these funds were up more than 32% in 2006.

Following the iPath
With the ETN structure of the new iPath vehicle, you don't have long-term tracking risk against the index, such as you do with traditional ETFs. The risk you face is that Barclays will go under and won't be able or willing to pay when the note comes due. For what it's worth, though, Barclays' long-term unsecured obligations are rated AA by Standard & Poor's and Aa1 by Moody's Investors Service. Barclays guarantees that there will be no tracking error and that changes in the price will match changes in the index. You can also sell the fund on the NYSE during trading hours, hold it until maturity, or redeem it directly with Barclays.

Land of opportunity -- and risk
India has been a promising market for many years. If you want exposure to this market before it is crowned the next new thing, you have a limited number of choices. The new ETN from Barclays seems like an interesting investment for a small part of an investor's portfolio, especially if you want to invest in a chip of the BRIC quartet. However, be prepared for some volatile swings and possibly a long time horizon before INP pays off.

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Fool contributor Zoe Van Schyndel lives in Miami and enjoys the sunshine and variety of the Magic City. She does not own any of the funds or stocks mentioned in this article. The Motley Fool has a disclosure policy.