Top ETFs for foreign investing

ETFs have added to their advantages over closed-end funds over the last few years. That’s because ETFs have evolved, and competition has increased. Still, there are a lot of ETFs that have been created to tap into popular, but risky, themes and fads, so you need to be very selective with your ETF holdings. But the best ETFs offer a great combination of low fees and top-quality stocks.

Below are five foreign ETFs we like. All have recovered from their lows earlier this year, but we think they still have room to rise.

ISHARES MSCI EMERGING MARKETS INDEX FUND $41.85 (New York Exchange symbol EEM; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Index.

The fund’s geographic breakdown includes: Brazil, 14.8%; South Korea, 12.4%; China, 11.2%; Taiwan, 10.4%; South Africa, 8.1%: Hong Kong, 6.8%; Russia, 6.3%; India, 6.0%; Mexico, 4.6%; and Israel, 3.3%.

iShares MSCI Emerging Markets Index Fund’s top holdings are Samsung Electronics, 3.9%; Taiwan Semiconductor (Taiwan: computer chips), 2.7%; Petrobras (Brazil: energy), 2.6%; Banco Itau Holding Finance (Brazil: banking), 2.5%; Posco (steel), 2.2%; China Mobile (China: wireless), 1.9%; Gazprom (Russia: gas utility), 1.8%; KB Financial Group Inc. (South Korea: banking), 1.8%; and Banco Brandesco (Brazil: banking), 1.7%.

The fund’s industry breakdown is as follows: Financials, 25.3%; Energy, 15.4%; Information Technology, 14.5%; Materials, 14.2%; Telecommunication Services, 10.0%; Industrials, 5.4%; Consumer Discretionary, 4.3%; Consumer Staples, 4.2%; Utilities, 3.9%; and Health Care, 2.0%.

iShares MSCI Emerging Markets Index Fund was launched on April 7, 2003. The ETF has an expense ratio of 0.73%.

The fund is up 110.7% from its March 2009 low of $19.86. Its wide diversification among emerging markets tones down its risk, but emerging markets are still far more volatile and vulnerable than markets in the developed world.

iShares MSCI Emerging Markets Index Fund is a buy for aggressive investors.

ISHARES MSCI SOUTH KOREA INDEX FUND $46.06 (New York Exchange symbol EWY; buy or sell through brokers), is an ETF that aims to track the MSCI Korea Index. The index aims to capture 85% of the total market capitalization of the South Korean stock market. The other 15% is unavailable for investment, partly due to limitations on foreign ownership.

The fund’s top holdings are Samsung Electronics at 18.0%; Posco (steel), 7.4%; KB Financial Group, 4.3%; Shinhan Financial, 4.2%; Hyundai Motor Co., 3.8%; LG Electronics, 2.4%; Hyundai Mobis (Hyundai auto parts and service), 2.3%; Samsung Electronics preferred shares, 2.2%; LG Chemical, 2.2%; and Korea Electric Power, 2.0%.

The fund’s industry breakdown is as follows: Information Technology, 28.1%; Financials, 18.3%; Industrials, 14.7%; Materials, 13.3%; Consumer Discretionary, 12.0%; Consumer Staples, 5.1%; Telecommunication Services, 3.3%; Energy, 2.4%; Utilities, 2.2%; and Health Care, 0.6%.

iShares MSCI South Korea Index Fund was launched on May 9, 2000. The ETF has an expense ratio of 0.63%.

The fund is up 131.1% from its March 2009 low of $19.93. That’s mainly because interest-rate cuts, tax cuts and government stimulus spending are boosting the South Korean economy.

As well, exports to China are rising. That’s helping offset lower exports to the U.S. and Europe. China is now South Korea’s biggest export market.

A continuing drawback to any South Korean investment is the country’s proximity of North Korea, with its nuclear weapons and seemingly unstable leader. So far, however, his bluster has stopped far short of any serious risk to the south.

iShares MSCI South Korea Index Fund is a buy for aggressive investors.

ISHARES MSCI GERMANY FUND $22.95 (New York Exchange symbol EWG; buy or sell through brokers) is an ETF that aims to track the MSCI Germany Index. This index aims to capture 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly because of limitations on foreign ownership.

The fund’s top holdings are Siemens AG (engineering conglomerate), 9.6%; E.ON AG (energy), 9.6%; Bayer AG (diversified chemicals), 6.9%; Allianz (insurance), 6.7%; BASF (chemicals), 6.3%; Daimler AG (automobiles), 5.6%; Deutsche Bank AG, 5.0%; Deutsche Telekom AG, 4.9%; SAP AG (software), 4.8%; and RWE AG (energy and waste disposal), 4.4%.

The fund’s industry breakdown is as follows: Financials, 19.9%; Industrials, 14.6%; Utilities, 14.2%; Consumer Discretionary, 13.6%; Materials, 12.6%; Health Care, 10.7%; Information Technology, 5.7%; Telecommunication Services, 4.9%; and Consumer Staples, 3.7%.

The fund was launched on March 12, 1996. It has an expense ratio of 0.52%.

iShares MSCI Germany Fund is up 84.0% from $12.47 in March 2009.

Exports account for around 45% of Germany’s economy, so it needs a continued global recovery to sustain its growth. However, the German economy is steadily recovering, partly because of government stimulus spending.

iShares MSCI Germany Fund is a buy.

ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $51.79 (New York Exchange symbol ECH; buy or sell through brokers), is an ETF that aims to track the MSCI Chile Investable Market Index. This index consists of stocks that are mainly traded on the Santiago Stock Exchange.

The fund’s top holdings are Empresas Copec SA (conglomerate), 12.9%; Empresa Nacional de Electricidad (electric power), 10.6%; Sociedad Quimiday Minera de Chile (mining), 7.3%; Empresas CMPC (pulp and paper), 7.2%; Cencosud SA (retailer), 5.2%; Banco Santander Chile (banking), 4.7%; CAP SA (iron-ore mining and steel), 4.3%; Lan Airlines SA (Chilean national airline), 4.2%; and Colbun SA (electric power), 3.9%.

The fund’s industry breakdown is as follows: Utilities, 28.4%; Materials, 20.1%; Industrials, 19.3%; Consumer Staples, 9.9%; Financials, 8.9%; Consumer Discretionary, 7.8%; Telecommunication Services, 4.3%; Information Technology, 1.0%; and Health Care, 0.3%.

iShares MSCI Chile Investable Market Index Fund was launched on November 12, 2007. The ETF has an expense ratio of 0.63%.

iShares MSCI Chile Investable Market Index Fund is up 72.6% from its March 2009 low of $30.

Chile is the world’s biggest copper supplier. Asian countries are particularly large consumers of Chilean copper. Chile’s president, Michelle Bachelet, prudently used high copper prices from 2006 to 2008 to pay off the country’s foreign debt and save for an economic downturn. As a result, Chile has been able to implement a big economic stimulus plan without taking on debt.

This includes public-works projects, tax breaks for businesses and cash distributions to the country’s poorest citizens. Still, a continuing dependence on resources is something of a drawback to investment in this country.

iShares MSCI Chile Investable Market Index Fund is a buy for aggressive investors.

ISHARES S&P INDIA NIFTY 50 INDEX FUND $25.51 (Nasdaq symbol INDY; buy or sell through brokers), is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities on the National Stock Exchange of India.

The fund’s top holdings are: Reliance Industries (conglomerate), 13.0%; Infosys Technologies (software), 7.9%; ICICI Bank, 6.9%; Larsen & Toubro Ltd. (conglomerate), 6.7%; ITC Ltd. (conglomerate), 4.7%; HDFC Bank, 4.3%; State Bank of India, 4.1%, Oil & Natural Gas Corporation, 3.0%; and Tata Consulting Services (information technology), 2.4%.

The fund’s industry breakdown is as follows: Banks, 17.1%; Refineries, 13.5%; Computers: Software, 12.1%; Engineering, 6.7%; Steel and Steel Products, 4.9%; Finance: Housing, 4.9%; Cigarettes, 4.7%; Power, 4.5%; Automobiles, 4.1%; and Electrical Equipment, 3.9%.

iShares S&P India Nifty 50 Index Fund was launched on November 18, 2009. The ETF has an expense ratio of 0.89%.

India’s economy has grown by more than 9% annually over the last few years. The global recession has hurt growth, but it could still expand by 6.5% this year, and as much as 7.5% next year.

iShares S&P India Nifty 50 Index Fund is a buy for aggressive investors.