ishares

iShares S&P/TSX Capped Information Technology Index Fund, $6.31, symbol XIT on Toronto (Shares outstanding: 4.9 million; Market cap: $30.9 million; ca.ishares.com), holds just six stocks in the information technology field. Its MER is 0.55%. The fund aims to mirror the performance of the S&P/TSX Capped Information Technology Index, which is made up of the largest information technology stocks in Canada. The weight of any one company is capped at 25% of the index’s market capitalization. Every three months, the fund’s managers look to see if the market cap of any given stock has risen above 25% (such as CGI Group, now at 27.0%—see below) of the total market cap of all the stocks in the index. If so, the fund will sell shares of that stock to bring its weight down to the 25% cap level. The fund then uses the proceeds of the sale to buy other stocks in the index on a proportional basis....

Shares MSCI Japan Index Fund, $9.70, symbol EWJ on the American exchange (Shares outstanding: 511.2 million; Market cap: $5.0 billion; us.ishares.com), has been hurt, along with most Japanese stocks, by the after-effects of the March 2011 earthquake and tsunami, which slowed production of goods for export to the country’s major trading partners, including Europe and the U.S. Also hurting exports is the soaring yen, which has been trading at its highest levels since World War II. That makes Japanese goods more expensive in overseas markets. Even so, we think Japan’s economy will rebound as renewed growth in Europe and the U.S., as well as stronger growth in China, push up demand for Japanese exports. That will benefit shares of high-quality Japanese companies....

Our view is that virtually all Canadian investors should have 20% to 30% of their portfolios in U.S. stocks, like the ones we recommend in Wall Street Stock Forecaster. We feel now is a good time to hold high-quality U.S. stocks, and we see U.S. dollar exposure as a plus—a valuable form of diversification. Another option is to add some foreign exchange traded funds (ETFs), such as those we recommend in Canadian Wealth Advisor, to your portfolio in reasonable quantities, perhaps 10% of your holdings if you are a conservative investor (including 5% or so in higher-risk funds, such as emerging market ETFs)....

You may find that exchange-traded funds (ETFs) have a place in your portfolio. Unlike many other financial innovations, they don’t load you up with heavy management fees or tie you down with high redemption charges if you decide to withdraw. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. They have another advantage. Since shares are only added or removed when the underlying index changes, there’s a low turnover. That means you aren’t faced with the capital gains bills generated by the yearly distributions most mutual funds pay out to their unitholders....

RioCan REIT is our #1 safety-conscious pick for 2012. The trust would be a sound addition to the Manufacturing segment of almost any investor’s portfolio. But if you want to hold a range of REITs, you can do so through the iShares CDN REIT Sector Index Fund, an ETF lets you hold 13 in all. And you’ll still have lots of exposure to RioCan, because it’s the ETF’s largest holding. Here’s a closer look: ISHARES CDN REIT SECTOR INDEX FUND $15.72 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 13 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 the ETF’s value....

Exchange traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

ISHARES MSCI SOUTH KOREA INDEX FUND $54.02 (New York Exchange symbol EWY; buy or sell through brokers), is an exchange-traded fund that aims to track the MSCI Korea Index.

The fund’s top holdings include Samsung Electronics, Hyundai Motor Co., Posco (steel), Hyundai Mobis (auto parts), Shinhan Financial, Kia Motors, LG Chemical, KB Financial, Hyundai Heavy Industries and Hynix Semiconductor.

The South Korean stock market has seen little change since the death of North Korean leader Kim Jong-il on December 17, 2011, and the elevation of his son Kim Jong-un as leader.

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ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $24.23 (New York Exchange symbol ESR; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Eastern Europe Index. The fund’s geographic breakdown is as follows: Russia, 74.0%; Poland, 17.4%; Czech Republic, 4.3%; and Hungary, 3.5%.

The fund’s top holdings are Gazprom (Russia: gas utility), 21.0%; Lukoil (Russia: oil), 10.0%; Sberbank (Russia: bank), 7.9%; Novatek (Russia: natural gas), 4.2%; Rosneft Oil Company (Russia: oil and gas), 3.9%; Uralkali (Russia: potash), 3.7%; Mobile Tele-Systems (Russia: wireless), 2.8%; MMC Norilsk Nickel (Russia: mining), 2.7%; Tafneft (Russia: oil and gas); and CEZ AS (Czech Republic: utility), 2.2%. iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.68%.

The fund’s concentration in Russia adds risk, especially given its current political tensions. But the long-term outlook for resource prices, including oil and gas, is positive. That’s a big plus for Russia’s largely resource-based economy, which is forecast to grow by 3.5% in 2012.

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ISHARES S&P INDIA NIFTY 50 INDEX FUND $20.44 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities.

The fund’s top holdings are Infosys Technologies (software), 9.5%; Reliance Industries Ltd. (conglomerate), 8.4%; ITC Ltd. (conglomerate), 7.7%; Housing Development Finance, 6.3%; ICICI Bank, 5.7%; HDFC Bank, 5.6%; Tata Consultancy Services Ltd. (information technology), 4.2%; Larsen & Toubro Ltd. (conglomerate), 3.9%; Hindustan Unilever Ltd. (consumer products), 3.1%; and State Bank of India, 3.0%.

The fund’s industry breakdown includes: Banks, 17.0%; Computers, 15.9%; Refineries, 8.8%; Cigarettes, 7.7%; Finance: Housing, 6.3%; Automobiles, 5.4%; Pharmaceuticals, 4.5%; Power, 4.3%; Engineering, 3.9%; and Oil Exploration, 3.3%. The fund has an expense ratio of 0.89%.

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The long-term outlook remains bright for emerging market economies and stocks. One of the best ways to profit from that growth is through low-fee exchange-traded funds (ETFs). ISHARES S&P INDIA NIFTY 50 INDEX FUND $20.44 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities. The fund’s top holdings are Infosys Technologies (software), 9.5%; Reliance Industries Ltd. (conglomerate), 8.4%; ITC Ltd. (conglomerate), 7.7%; Housing Development Finance, 6.3%; ICICI Bank, 5.7%; HDFC Bank, 5.6%; Tata Consultancy Services Ltd. (information technology), 4.2%; Larsen & Toubro Ltd. (conglomerate), 3.9%; Hindustan Unilever Ltd. (consumer products), 3.1%; and State Bank of India, 3.0%....