ETF Update

Sick of BRIC ETFs? Part 2

Stock quotes in this article: RSX , VNM , THD , TUR , EWY  

In the quest to seek out the newest emerging markets, investors have been snapping up shares of exchange traded funds that focus on individual countries like Russia, Vietnam, Thailand, Turkey and South Korea.

Rather than sticking with traditional "BRIC" ETFs, which combine Brazil, Russia, India and China, risk-tolerant investors are looking for new ETFs to participate in emerging markets.

In the first installment of Sick of BRIC? I discussed Market Vectors Russia(RSX) and Market Vectors Vietnam(VNM).

Today's offering focuses on iShares MSCI Thailand Index Fund(THD), iShares MSCI Turkey Index Fund(TUR) and iShares MSCI South Korea Index Fund(EWY).

Emerging markets funds can be volatile, so a small asset allocation to these funds is appropriate for most buy-and-hold investors.

iShares MSCI Thailand Index Fund

THD is up more than 70% year to date on the strength of its energy and financial-heavy portfolio. The capitalization-weighted portfolio tracks the Thai "slice" of the MSCI Index with the MSCI Thailand Investable Market Index.

As is the case with many global economies, increased spending on the part of Thailand's central government has helped to pull this country out of the economic downturn. While Thailand's economy contracted nearly 5% year over year during the second quarter, there was an increase in overall growth of 2.3% from the first to second quarter.

According to The Wall Street Journal, recently released government data suggest that the worst of the financial downturn could be past for Thailand. While risk factors like the swine flu and political uncertainty still hover over this emerging economy, government estimates suggest an expansion of as much as 3% in 2010.

Commodities and financials, the top two sectors represented in the THD portfolio, continue to improve across the globe. As trade and tourism improve, and government spending continues, THD still may have a ways to run.

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