ishares

ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $27.58 (New York symbol ESR; buy or sell through brokers) has 73.6% of its assets invested in Russia, followed by Poland at 20.3%; Czech Republic, 3.0%; and Hungary, 2.4%.

The fund’s top holdings are Gazprom (Russia: gas utility), 17.3%; Sberbank (Russia: bank), 10.8%; Lukoil (Russia: oil), 10.2%; Magnit OJSC (Russia: retailing), 5.1%; and Novatek (Russia: natural gas), 3.9%. Its expense ratio is 0.67%.

The fund’s concentration in Russia, and in resources, adds risk. But the long-term outlook for commodities, including oil, is positive.
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ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $37.54 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund 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, 9.6%; China Construction Bank, 9.0%; Industrial & Commercial Bank, 8.0%; Tencent Holdings, 7.1%, Bank of China, 6.1%; China Overseas Land & Investment, 4.1%; PetroChina, 4.1%, Agricultural Bank of China, 4.0%; and CNOOC, 3.9%.

The fund’s holdings give it the following industry breakdown: Financials, 56.0%; Telecommunications, 16.0%; Oil and Gas, 12.1%; Technology, 7.1%, Basic Materials, 3.7%; and Consumer Goods, 3.2%. Its expense ratio is 0.74%.
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Our view is that virtually all Canadian investors should have 20% to 30% of their portfolios in the U.S. stocks we recommend in Wall Street Stock Forecaster. These investments can provide all the foreign exposure most investors need. If you do want to add more foreign content, you could buy individual stocks. But for most investors, directly investing in foreign stocks can add an extra layer of risk and expense. As well, timely and accurate information about overseas companies is not always available, and securities regulations vary widely between countries. It can also be hard for your broker to buy shares on foreign markets without paying a premium. Tax rules and restrictions on transferring funds between nations add further uncertainty and cost. We think one of the best ways to invest in foreign (non-U.S.) markets is through exchange traded funds (ETFs). You could add some of these ETFs in reasonable quantities: perhaps 10% of your holdings if you’re a conservative investor (including 5% or so in higher-risk funds, such as emerging market ETFs)....

We haven’t found any water-focused stocks we recommend as buys. That’s mostly because the water business has limited growth prospects in developed countries, and is subject to a lot of regulatory hurdles. It may offer more opportunity in developing countries, many of which are in desperate need of clean water, but investing in these countries exposes you to political risk. However, here’s a look at the iShares S&P Global Water Index ETF: iShares S&P Global Water Index ETF, $21.31, symbol CWW on Toronto (Shares outstanding: 1.5 million; Market cap: $32.0 million; ca.ishares.com), aims to match the performance of the S&P Global Water Index. The index is made up of 50 stocks selected from companies listed on global developed market exchanges. The companies are picked based on the relative importance of the global water industry to their businesses....

iShares Diversified Monthly Income Fund ETF, $11.95, symbol XTR on Toronto (Shares outstanding: 60.5 million; Market cap: $723.0 million; ca.ishares.com), holds units of eight different iShares exchange traded funds. Among these holdings are units of three bond funds that add up to 54.2% of the iShares Diversified Monthly Income Fund ETF’s assets. These are the iShares DEX Hybrid Bond Index Fund, the iShares U.S. High Yield Bond Index Fund and the iShares 1-5 Year Laddered Corporate Bond Index Fund, all of which hold corporate bonds. As a general rule, the safest bonds are issued by or guaranteed by the federal government. Next are provincial issues or bonds with provincial guarantees. After that come corporate bonds....

ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $37.54 (New York symbol FXI; buy or sell through brokers) is an exchange traded fund 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....

ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $27.58 (New York symbol ESR; buy or sell through brokers) has 73.6% of its assets invested in Russia, followed by Poland at 20.3%; Czech Republic, 3.0%; and Hungary, 2.4%.

The fund’s top holdings are Gazprom (Russia: gas utility), 17.3%; Sberbank (Russia: bank), 10.8%; Lukoil (Russia: oil), 10.2%; Magnit OJSC (Russia: retailing), 5.1%; and Novatek (Russia: natural gas), 3.9%....

Canada’s inflation rate is just 1.1%, well below the Bank of Canada’s 2% target. That lets the bank keep interest rates low, which holds down our dollar, making our exports cheaper in world markets. That’s good for Canada’s economic growth.

Even so, the long-term outlook is for higher interest rates....

ISHARES CDN REIT SECTOR INDEX FUND $15.46 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of each REIT is limited to 25% of the ETF’s value.

iShares CDN REIT’s expenses are 0.60% of its assets....

ISHARES AUSTRALIA INDEX FUND $25.47 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 70 largest Australian stocks. Its MER is 0.50%.

The fund’s top holdings include Commonwealth Bank of Australia, 10.7%; BHP Billiton, 10.6%; Westpac Banking Corp., 9.4%; Australia and New Zealand Banking Group, 7.8%; National Australia Bank, 7.5%; Woolworths, 4.0%; Wesfarmers, 3.8%; CSL Ltd., 2.9%; Rio Tinto, 2.5%; Woodside Petroleum, 2.3%; and Westfield Group, 2.1%.

Australia benefits from its stable banking and political systems. It is also rich in natural resources, and it’s close to key Asian markets with vast potential, including India and China.
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