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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....

ISHARES AUSTRALIA INDEX FUND $23.26 (New York symbol EWA; buy or sell through brokers), is an ETF that holds the 73 largest Australian stocks. Its MER is 0.53%. The fund’s top holdings include BHP Billiton, 14.1%; Commonwealth Bank of Australia, 8.9%; Westpac Banking Corp., 7.8%; Australia and New Zealand Banking Group, 6.5%; National Australia Bank, 6.5%; Wesfarmers, 3.8%; Rio Tinto, 3.5%; Woolworths, 3.4%; Newcrest Mining, 3.0%; and Woodside Petroleum, 2.7%. Australia benefits from its stable banking and political systems. It is also rich in natural resources, and its exports are in high demand in Asian markets, including India and China....

In September, gold hit an all-time high of $1,900.30 U.S. an ounce. It now trades at around $1,750.30 U.S. Silver reached an all-time high in April, when it hit $49.76 U.S. an ounce. It has since pulled back to today’s price of $33.07 U.S. Gold and silver could well regain their highs and move up even further over the longer term, although they will likely remain volatile. Higher prices would arise from investor fears that inflation or global political and economic instability will weaken key currencies, such as the euro or the U.S. dollar. If you want to hold a number of gold or silver stocks, these two exchange-traded funds offer top-quality global miners and low fees....

Exchange-traded funds (ETFs) offer very low management fees. As well, the best ETFs offer well-diversified, tax-efficient portfolios of high-quality stocks. However, the quality of ETFs varies widely. All too many exist to tap into popular, but risky, themes and fads. So you need to be highly selective with your ETF holdings. Here are six foreign ETFs we like:...

iShares S&P/TSX Capped Materials Index Fund, $20.49, symbol XMA on Toronto (Shares outstanding: 12.8 million; Market cap: $262.3 million; ca.ishares.com), holds 66 stocks in resource-related fields, such as mining, fertilizer production and forestry. The fund’s MER is 0.55%. This fund aims to mirror the performance of the S&P/TSX Capped Materials Index, which is made up of the largest resource stocks in Canada. The weight of any one company is capped at 25% of the index’s market capitalization. So, every three months, if the market cap of any given stock has risen above 25% of the total market cap of all the stocks in the index, 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....

ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $19.60 (Toronto symbol XDV; buy or sell through a broker; ca.ishares.com) 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 its assets. The fund’s MER is 0.50%. Its yield is 2.7%. The fund’s top holdings are CIBC, 6.6%; Bank of Montreal, 5.3%; Bonterra Energy, 5.2%; National Bank, 4.9%; TD Bank, 4.9%; Telus, 4.8%; IGM Financial, 4.3%; Enbridge, 4.2%; BCE, 4.2%; Canadian Utilities, 3.7%; and Manitoba Telecom, 3.7%. The fund holds 50.2% of its assets in financial stocks. Utilities are next, at 26.4%. 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 $16.56 (Toronto symbol XIU; buy or sell through a broker; ca.ishares.com) is a good, low-fee way to buy the top stocks 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. The index’s top holdings are Royal Bank, 6.7%; TD Bank, 6.4%; Bank of Nova Scotia, 5.5%; Barrick Gold, 4.8%; Suncor Energy, 4.1%; Potash Corp., 3.9%; Goldcorp, 3.8%; Bank of Montreal, 3.7%; Canadian Natural Resources, 3.2%; CN Railway, 3.2%; BCE Inc., 3.0%, TransCanada Corp., 2.9%, CIBC, 2.9%; Enbridge, 2.6%; Cenovus Energy, 2.3% and Manulife Financial, 2.1%....

ISHARES DEX UNIVERSE BOND INDEX FUND $31.08 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through a broker) mirrors the performance of the DEX Universe Bond Index. The 502 bonds in the portfolio have an average term to maturity of 9.31 years. The fund’s MER is 0.32%. The bonds in the index are 70.6% government and 29.4% corporate. The fund yields 3.6%, compared to the Short Term Bond Fund’s 3.2%. Its yield to maturity is 2.40%, 0.88% above the Short Term Fund. That reflects the added risk of holding long-term bonds....

ISHARES DEX SHORT TERM BOND INDEX FUND $29.29 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the DEX Short-Term Bond Index. This index consists of a wide range of investment-grade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 264 bonds with an average term to maturity of 2.85 years. The bonds in the index are 66.7% government and 33.3% corporate. The fund’s MER is 0.26%. iShares DEX Short Term Bond Index Fund yields 3.2%. However, this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. But as a result, they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, which means the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields....

The Bank of Canada is holding interest rates steady, even though the current inflation rate of 3.1% is well above the bank’s 2% target. The bank doesn’t want to slow Canada’s economic growth with higher rates, or push the dollar any higher. Still, the long-term outlook is for higher interest rates. The heavy deficit spending of the past few years and the expansion of the money supply, which is still underway, increase the potential for even higher inflation. We continue to advise against investing in bonds right now, because today’s low interest rates make them unattractive — and rising interest rates would push down their value....