Index funds have long been a Foolish way to gain instant, low-cost diversification without worrying about timing the market.

Their ease and convenience may explain the growing popularity of exchange-traded funds -- mutual funds that trade like stocks. According to the Investment Company Institute, ETF assets totaled more than $568 billion of the more than $1 trillion in stock index funds as of Jan. 31 -- a 32% increase over last year, but down $39 billion from December.

Originally modeled after index funds, ETFs have gradually narrowed to specialized slices of the market. While that's a boon to investors seeking specifically targeted investments, it also concentrates the risks of specialization, tilting a portfolio away from the diversification that makes index investing attractive.

Today, we're looking at the ETFs with holdings that have had the best earnings growth over the past 12 months. We'll then combine that information with the views of the collective intelligence of the 85,000 professional and novice investors at Motley Fool CAPS and see which funds our participants have rated as the best.

ETF

Earnings Growth TTM

1-Year Return

CAPS Rating

HealthShares Euro Medical Products & Devices

34.01%

N/A

NR

WisdomTree Japan Small-Cap Dividend (NYSE: DFJ)

30.45%

(17.14%)

***

iShares FTSE EPRA/NAREIT Asia (Nasdaq: IFAS)

29.06%

N/A

NR

Vanguard Emerging Markets Stock ETF (AMEX: VWO)

28.53%

30.73%

*****

Claymore/AlphaShares China Real Estate (NYSE: TAO)

25.79%

N/A

*****

First Trust ISE Chindia

25.38%

N/A

****

Market Vectors Global Alternative Energy ETF (NYSE: GEX)

24.37%

N/A

****

PowerShares DWA Emerging Markets Technical Leaders

23.74%

N/A

N/R

Vanguard FTSE All-World ex-US ETF

22.99%

5.48%

*****

HealthShares Orthopedic Repair

22.61%

N/A

N/R

Source: Yahoo! Finance, Wall Street Journal. 1-year returns are cumulative total returns. CAPS ratings courtesy of Motley Fool CAPS. N/A = not available, N/R = not rated.

Tread carefully here, Fools. The market offers many ETFs, but few have long histories. Few even have a one-year performance record let alone a three-year record -- arguably an important milestone -- so only time will tell whether they can build solid track records over longer periods.

An emerging trend
It's no secret that the emerging markets of the so-called BRIC countries -- Brazil, Russia, India, and China -- have been hot investments this past year. Yet if you focused only on those headline-grabbing countries, you'd miss opportunities that abound in countries like Mexico, Korea, and the Czech Republic.

An ETF like Vanguard's Emerging Markets mirrors the MSCI Emerging Markets Index, which includes all of those countries, and more. Although six of its top 10 holdings hail from BRIC countries, it also includes South Korea's POSCO (NYSE: PKX) and Mexico's America Movil (NYSE: AMX).

CAPS investors such as maitas44 saw more than a month ago that the future of investment gains would come from international companies, particularly in these emerging economies.

After Alvin Toffler's idea in his "third wave" book. First wave was agro... Second wave was industry ... Third wave was knowledge... The problem is that USA, Europe and Japan have most of its workers in the third wave, while the rest of the world still have a lot of its population in the first and second wave, and are moving to the third. This is why the rest of the world will grow faster than the so called "first world", and VWO tracks greatly the rest of the world.

A basket of opinions
Although ETFs have been around since the 1990s, investors should exercise caution with any ETF lacking a long track record. Over on CAPS, let us know whether you think these ETFs will continue to outperform, or whether it's time for new ones to top the lists.

Motley Fool Global Gains agrees that the world is your investment oyster. Pry open 30 days of free stock picks with a trial subscription. POSCO is an Income Investor selection.

Fool contributor Rich Duprey does not have a financial position in any funds mentioned in this article. Click to see Rich's holdings. The Motley Fool has a world-class disclosure policy that has been around the world and back again.