Emerging Markets Emerge

July 18, 2007

SAN DIEGO (ETFguide.com) - Sir John Templeton would be proud.

As a long-time advocate of investing in developed and emerging economy stocks, he preached the importance of globally diversified portfolios. It's how he made his billions. And as foreign market stocks continue to outpace domestic stocks, more investors are taking notice.  

Particularly hot, has been the performance of emerging markets stocks.

So far in 2007, exchange-traded funds (ETFs) tracking broad emerging markets have outperformed funds following developed international markets. Vanguard Emerging Markets ETF (Ticker: VWO) is ahead by 26.57 percent versus the 13.48 percent gain for the iShares MSCI EAFE Index ETF (Ticker: EFA).* 

Particular standouts have been funds with exposure to Latin America. The iShares S&P Latin America 40 Index Fund (Ticker: ILF) is up by 34.47 percent. Brazil and Mexico account for over 80 percent of the fund’s country exposure with Argentina and Chile sharing most of the rest.  

Another fund with direct regional exposure to Latin America is the SPDR S&P Emerging Latin America ETF (Ticker: GML). The fund was launched by State Street Global Advisors in March and has recorded 3-month gains of 20.38 percent.

Single country funds, while more concentrated and volatile, have posted strong year-to-date gains too.

The iShares MSCI Malaysia ETF (Ticker: EWM) is ahead by 31.65 percent, the iShares MSCI Mexico ETF (Ticker: EWW) is up by 23.18 percent, and the iShares MSCI Brazil ETF (Ticker: EWZ) has gained 45.61 percent.  

In related news, WisdomTree Investments introduced the Emerging Markets High-Yielding Equity Fund (Ticker: DEM) just last week on the NYSE. The new ETF 

focuses on high dividend-yielding stocks selected from 19 emerging market nations in Europe, Asia and Latin America. Companies are weighted in the index based on

annual cash dividends paid.

*All performance data through July 16, 2007 and courtesy of Morningstar.