Emerging Market ETF

I've been lucky (yeah, I'd prefer to take credit, but honesty is probably the better way to go) to have been holding a decent chunk of my portfolio in emerging markets through Barclays ETF offering (EEM). This part of my portfolio has increased significantly recently. But that's largely irrelevant to you. What goes up today could easily go down tomorrow.

The attraction of the Barclays ETF is that it makes it easy for individual investors to get in on the growth going on in countries that are too volatile or complicated to otherwise get in to. This ETF complements the international ETF from Barclays which holds shares of non-US, but still well established companies. Unlike the international ETF, iShares EEM does a better job of balancing the weights of individual countries. For example, 16% goes to South Korea, 11% to Taiwan, 10% to China, 10% to Brazil, 10% to Russia, and 9% to South Africa.

Vanguard offers an alternative with their emerging market ETF (VWO). It uses very similar weightings as Barclay's, but has an annual fee of only 0.30% compared to 0.75%.

There are also ETFs that offer investment opportunities in specific countries of your choice. The risk with such specific ETFs is that you'll chase performance by buying what's hot just as it peaks. I prefer the more balanced and less emotional approach of picking up a basket that covers different countries.