How Emerging Market Sector ETFs Fit In Your Portfolio

Investors who appreciate exchange traded funds (ETFs) because of their flexibility and ability to invest sector by sector just got a new tool or two for this.

As emerging markets continue to deliver strong performance, the importance of emerging markets exposure in your portfolio as the market recovers is becoming more apparent, explains Roger Nusbaum for TheStreet. But until recently, the only way to get exposure to growth in these areas was through broad funds.

In any economy, there are often sectors outperforming the broader market that investors want to be able to drill down into without having to get exposure to everything but the kitchen sink in a broad fund such as the SPDRs (SPY).

When it comes to emerging markets, originally investors had choices such as the iShares MSCI Emerging Market Fund (EEM), but it’s a broad-based fund that does not give precise exposure  to sectors within these markets.

Investors want to be able to fine-tune their portfolios with specific industries in emerging markets such as health care, utilities or energy and materials, without  the weight of an entire broad index.

Emerging Global Shares answered the need for this with the following new ETFs:

• EGS Emerging Markets Energy Fund (EEO): Invests heavily in Russia 36%; China 16%; Brazil 9.5%; Poland, Hungary and Colombia are also represented.
• EGS Emerging Markets Metals and Mining Fund (EMT): Heavy in South Africa 30%; Brazil 23%; China 16%; Russia 13%; Indonesia and Turkey included in exposure.

Ten other funds will eventually follow in this family of targeted emerging markets exposure.

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