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The investment industry has created all sorts of exchange-traded funds (ETFs) in recent years. However, quality varies. All too many exist to tap into popular, but risky, themes and fads, so you need to be highly selective with your ETF holdings. ETFs offer very low management fees. In addition to low fees, the best ETFs offer well-diversified, tax-efficient portfolios of high-quality stocks. Here are five foreign ETFs we like:...

ISHARES CDN REIT SECTOR INDEX FUND $12.72 (Toronto symbol XRE; buy or sell through a broker) holds the 11 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT is limited to 25% of this index’s value. RioCan REIT is the fund’s largest holding, at 25%, followed by H&R REIT (14.2%), Canadian REIT (10.7%), Boardwalk REIT (8.6%), Calloway REIT (8.4%), Primaris Retail REIT (6.7%), Canadian Apartment Properties REIT (5.8%), Cominar REIT (5.5%), Chartwell Seniors Housing REIT (5.4%), Dundee REIT (4.9%) and Extendicare REIT (3.8%). The fund yields 5.6%. Most REITs, including those held by the iShares CDN REIT Sector Index Fund, are exempt from Ottawa’s new income-trust tax, which takes effect on January 1, 2011. That will help keep the fund’s distributions high. iShares CDN REIT’s expenses are 0.55% of its assets....

Energy ETFs (exchange-traded funds) can be a good, low-cost way to hold energy stocks. In our newsletters, we recommend a number of energy stocks that would be good additions to a stock portfolio. If you want to hold an energy ETF, here’s one that invests in the biggest Canadian energy firms: iShares S&P/TSX Capped Energy Index Fund, $17.99, symbol XEG on Toronto (Shares outstanding: 45.2 million; Market cap: $813.1 million) aims to mirror the performance of the S&P/TSX Capped Energy Index, which is made up of the largest-capitalization energy stocks on the Toronto exchange. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.55%. It yields 2.5%. iShares S&P/TSX Capped Energy Index Fund’s top-10 holdings are Suncor Energy, 18.0%; Canadian Natural Resources, 13.8%; Encana Corp., 8.1%; Cenovus Energy, 7.9%; Talisman Energy, 6.2%; Canadian Oil Sands Trust, 4.8%; Nexen, 3.9%; Imperial Oil, 3.6%; Penn West Energy Trust, 3.2% and Crescent Point Energy, 3.2%....

Dynamic Precious Metals Fund is a mutual fund that mainly invests in mining stocks and other resource companies. The $811.6-million fund focuses on small- to mid-cap stocks. Its MER is 2.75%. The fund holds 95.2% of its portfolio in gold and precious-metals stocks, and 2.9% in metals and minerals stocks. Its top-ten holdings are Osisko Mining, San Gold, Red Back Mining, Aurizon Mines, Agnico-Eagle Mines, Alamos Gold, Kinross Gold, Allied Nevada Gold, Eldorado Gold and Andean Resources. Dynamic Precious Metals Fund holds 85.4% of its portfolio in Canadian stocks, 10.6% in Australia and 4.2% in the U.S....

ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $40.04 (New York Exchange symbol FXI; buy or sell through brokers) is an ETF that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest and most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on the New York exchange. The fund’s top holdings are China Mobile, 10.3%; China Construction Bank, 9.4%; Industrial & Commercial Bank of China, 8.0%; China Life Insurance, 6.8%; CNOOC Ltd., 6.1%; China Unicom Hong Kong, 5.0%; Ping An Insurance Group, 4.4%; China Petroleum & Chemical, 4.1%; PetroChina, 4.0%; and Bank of China, 4.0%. The fund’s holdings give it the following industry breakdown: Financials, 45.6%; Telecommunications, 19.2%; Oil and Gas, 14.2%; Basic Materials, 9.4%; Industrials, 7.9%; Consumer Services, 1.8%; and Utilities, 0.8%. The ETF has an expense ratio of 0.73%. The dividend yield is 2.3%....

ISHARES MSCI CANADA INDEX FUND $25.44 (New York symbol EWC; buy or sell through brokers) is like a market-cap-based index fund, but its managers try to improve performance by tinkering with the index-fund formula. They do this through their proprietary Morgan Stanley Capital International Canada Index. The fund has an MER of 0.55%. The index’s top holdings are: Royal Bank, 7.1%; TD Bank, 5.6%; Suncor Energy, 4.5%; Bank of Nova Scotia, 4.4%; Barrick Gold, 3.9%; Canadian Natural Resources, 3.6%; Bank of Montreal, 3.1%; Goldcorp, 3.0%; Research in Motion, 2.9%; Potash Corp., 2.8%; Manulife, 2.8%; and CN Railway. If you want to own a Canadian index fund, you should buy the iShares S&P/TSX 60 Index Fund. You’ll pay about a third of the management fees....

ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $18.63 (Toronto symbol XDV; buy or sell through a broker) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of assets. The fund’s MER is 0.50%. It yields 4.0%. The fund’s top holdings are CIBC, 7.7%; Bank of Montreal, 6.8%; TD Bank, 5.8%; National Bank, 5.3%; Telus, 5.1%; Manitoba Telecom, 4.7%; Bank of Nova Scotia, 4.6%; Royal Bank, 4.2%; IGM Financial, 4.0%; and TransCanada Corp., 3.5%. The fund holds 60.3% of its assets in financial stocks. Utilities are next, at 23.0%. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector....

ISHARES S&P/TSX 60 INDEX FUND $16.78 (Toronto symbol XIU; buy or sell through a broker) (units split 4-for-1 in August 2008) is a good, low-fee way to buy the top stocks and income trusts on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets. Most of the stocks in the index are high-quality companies. However, as it must ensure that all sectors are represented, it holds a few we wouldn’t include, such as Yellow Pages Income Fund. The index’s top holdings are: Royal Bank, 7.5%; TD Bank, 6.1%; Bank of Nova Scotia, 5.2%; Suncor Energy, 5.1%; Barrick Gold, 4.8%; Canadian Natural Resources, 3.9%; Goldcorp, 3.5%; Bank of Montreal, 3.3%; CN Railway, 3.0%; Potash Corp., 2.8%; Manulife, 2.8%; CIBC, 2.7%; Research in Motion, 2.6%; and TransCanada Corp., 2.5%....

Chinese stocks have fallen about 13% since the start of this year, even though China’s economy continues to grow rapidly. Lower U.S. and European markets are part of the reason for the drop, but investors also worry that the Chinese government may raise interest rates and tighten bank lending to slow inflation and property speculation. That could weaken the country’s growth. However, the long-term outlook for China, and Chinese stocks, is strong. One of the best ways for investors to tap into that growth is through low-fee exchange-traded funds (ETFs). Here are our two Chinese ETF recommendations. One invests in all of the publicly traded Chinese stocks available to foreign investors. The other holds the 25 largest Chinese stocks....

On July 7, 2010, Agricultural Bank of China (AgBank) priced its first public share issue. The bank, which operates nearly 24,000 branches, will sell 25 billion shares on the Hong Kong Stock Exchange for HK$3.20 ($0.41 U.S.), and 22 billion shares on the Shanghai exchange for 2.68 yuan ($0.40 U.S.). Strong investor interest in China, whose economy grew 11.9% in the first quarter of 2010 compared to a year earlier, should help AgBank’s initial public offering (IPO) raise $22.1 billion U.S. That would make it the largest IPO in world stock market history, topping Industrial & Commercial Bank of China, which raised $21.6 billion U.S. in 2006. AgBank is the latest in a series of big world stock market IPOs from Asian and emerging markets this year. The world’s 10 biggest IPOs in 2010 include firms from China, Russia, Poland and India. The U.S. is noticeably absent from the list, and only one western European firm (from Spain) was included....