I first became intrigued with exchange-traded funds when I saw the line up of country-specific ETFs on Barclays iShares menu. There are now 23 country ETFs including two that track the Japanese market.
My waiting for more country ETFs seems to have ended last week as an SEC filing listed the following ETFs in the pipeline: iShares MSCI BRIC Index Fund, iShares MSCI Chile Index Fund, iShares MSCI Israel Index Fund, iShares MSCI Thailand Index Fund and a iShares MSCI Turkey Index Fund. These are welcome but were certainly not at the top of my wish list. What about Ireland, Norway and Denmark?
Thailand is interesting as it has been the best market in Asia and is also still one of the world's cheapest. I have also gotten quite a bit of calls asking about turkey. Israel is a technology center that packs a punch way beyond its weight. Chile is a wonderful success story and the star of Latin America not to mention an excellent play on copper.
Many purists are scornful of the country ETFs since they tend to be dominated by a few big multinationals and also are increasingly less dependent of their domestic economy. I accept that they are a hybrid; part play on global growth and part play on the home economy. The emerging market country ETFs (There are seven of them) are more centered on their country's economy. Plus, studies have shown that where a company has its primary listing and the perception of its home economy does impact stock prices.
Regardless, I find it continually fascinating to buy a county's stock market with just a click of the mouse.
By Carl Delfeld of the Chartwell ETF Advisor