The first exchange-traded funds (ETFs) were based on broad-market indexes, such as the S&P 500. Simple enough, right? Buy shares of S&P 500 SPDRs
Times have changed, though. As ETFs explode in popularity, we're seeing more and more ETFs launched, and they're getting less focused on big indexes and more on various market niches. Witness one such development: emerging-market ETFs -- and mutual funds, for that matter.
In a recent MarketWatch article, Barbara Kollmeyer discussed this new trend, profiling some new emerging-markets ETFs and mutual funds. She quoted Mark Mobius of the new Templeton Emerging Markets Small Cap Fund, who said, "One of the things we were getting from our customers was 'Why aren't you in Estonia? Why aren't you in Romania or Vietnam?'" This is one reason given for the launch of some new offerings -- many of which focus on the smaller companies you'll find in these countries.
The comment made me think of the only emerging-market investment currently in my portfolio -- the Vanguard Emerging Markets Stock Index Fund
So if you want broader exposure, you need to keep looking. One place to check out might be Mobius' new fund, which is expected to invest in the likes of Nigeria, Bolivia, Peru, Panama, and Vietnam.
If you want to focus on specific countries, you'll find you can often do so. The iShares MSCI Malaysia Index Fund
Should you even do it?
One question to ponder before jumping into any international investment, emerging-market or not, is how much you really know about the regions involved. Not all countries or regions are as stable as ours. It can be risky, if you don't know what you're doing. I recommend taking a little time to learn more about international investing. The following articles will shed some light:
You can learn much more about ETFs by checking out our ETF Center, which features info on how ETFs stack up against mutual funds, how to develop an investment strategy with ETFs, and how to avoid pitfalls and ETF impostors.
These articles may also be of interest:
Longtime Fool contributor Selena Maranjian owns shares of the Vanguard Emerging Markets Stock Index Fund and recently had a Motley Fool CAPS ranking of 1,472 out of 12,412. Want your own rating? Try out our new Foolish stock-rating community for yourself.
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