Everyone Is Talking About the Dollar. Let's Talk About Currency ETFs.

Exchange traded fund (ETF) investors are fully aware of the value of the dollar these days as they snap up products that allow them to hedge its losses. But now more than ever, even the average Joe knows what the dollar is (or isn't) worth.

It's invaded pop culture: you've got Jay-Z waving euros in a video. McDonald's commercials talk about how the dollar is "dropping like a lead balloon." Model Giselle Bundchen was rumored to be asking to be paid in euros awhile back.

Since when are exchange rates the subject on the minds of so many? People are becoming increasingly aware of the fact that it's possible to spend your dollars on other forms of currency, says Rob Walker for the New York Times. Some point to the internet and the wide choices of financial news sources.

One bank has sold foreign-denominated certificates of deposit (CDs) for years, and they're more popular today than ever.

Don't count out foreign currency ETFs and exchange traded notes (ETNs) - there are more choices than ever, and more are likely to come along. Investors can hedge the falling dollar against the euro or the Japanese yen and a number of other currencies, or they can simply bet on a bullish or bearish dollar.

Among the many currency ETFs and ETNs:

• CurrencyShares Euro Trust (FXE)
• PowerShares DB US Dollar Index Bullish (UUP)
• Market Vectors Rupee/USD ETN (INR)
• WisdomTree Dreyfus Brazilian Real (BZF)

Read the disclosure, as Tom Lydon is a member of Rydex Funds.

Power Shift Seems to Agree With Russia ETF

On May 7, Vladimir Putin stepped down and Russia's new president became Dmitry Medvedev - is it any coincidence that in one day, the Russia exchange traded fund (ETF) rose 4.4%?

Market Vectors Russia (RSX) seems to be a beneficiary of the surge in energy prices in particular, as 43.1% of the fund is allocated in the sector. It's up 6.4% year-to-date.

Foreign investors, attracted by the record-high oil prices, are turning a blind eye to the country's expulsion of U.S. diplomats and threats of a war with Georgia, reports Peter Apps for Reuters. The expulsions were ordered on April 28 after the United States expelled three diplomats earlier in April. The back-and-forth is bringing back Cold War memories.

Some investors might be deterred by Russia's issues, especially when compared with other emerging markets such as Brazil, which has the growth without the political risks. And those investors who are concerned with the oil and energy sector in Russia are focusing on other sectors such as construction and retail.

An ETF is a good way to get exposure to several sectors - the diversification means you could potentially benefit from any growth, while avoiding too much risk if it doesn't pan out.

Exposure to Russia can also be had through the SPDR S&P Emerging Europe (GUR), which also contains exposure to Poland, Turkey, the Czech Republic and Hungary. Year-to-date, it's down 5.2%.

A closed-end fund (CEF) contains Russia exposure, too: the Central Europe and Russia Fund (CEE), which is down 5.1% year-to-date. It holds 27.7% of the country.

For full disclosure, some of Tom Lydon's clients own shares of RSX.

BRIC ETFs Were Anything But In April

BRIC exchange traded funds (ETFs) showed themselves to be solid in April. Investor interest and enthusiasm for the funds has peaked over the past several years, with outstanding sector-leading performances in 2007.

Richard Widows for The Street researched the BRIC ETFs for the month of April, some of which posted impressive performance numbers.

SPDR S&P China (GXC) was up 17.97% in April, and was the top performer for the month. iShares FTSE/Xinhua China 25 Index (FXI) advanced 17.5% with a net $6 billion in assets.

Brazil fared well with a pair of ETFs: iShares MSCI Brazil Index (EWZ)  up 17.3% and HOLDRs TeleBras (TBH) up 14.2% in April.

First Trust ISE Chindia (FNI) was up 16.6%, as a blend of China and India, and Claymore/BNY BRIC (EEB) was up 11.1%. An honorable mention was given to iPath MSCI India Index (INP), as the ETN gives a hard-to-access passage to India. The fund rose 7.1% in April.

There's still more BRIC exposure to be had, though, both in single-country and broad-based form.

• Market Vectors Russia (RSX), up 3% in April
• SPDR S&P BRIC 40 (BIK), up 9.7% in April
• iShares MSCI BRIC Index (BKF), up 9.8% in April

For full disclosure, Tom Lydon's clients own shares of INP.

Currency ETF Moves Depend on Many Factors

One reader wanted to know about foreign currency exchange traded funds (ETFs). Thanks to ETFs, foreign currency is a market the average, everyday investor can get exposure to an area that previously wasn't accessible to them.

The rise and fall of currency has a lot to do with several factors, according to George D. Lambert for Investopedia. The value is impacted by economic growth, government debt levels, oil and gold prices, and more.

Just look at what happened recently in the United States: gross domestic product (GDP) slowed, government debt rose, oil and gold prices spiked. Suddenly, our dollar was hitting record lows against the yen and euro.

Currency ETFs replicate the movements of the currency in the exchange market either by holding currency cash deposits in the currency that's being tracked, or by using futures contracts on the underlying currency.

Currency ETFs can either track the specific currency you'd like, or a group of them, as in the case of the DB G10 Currency Harvest Fund (DBV).

How they operate is cut-and-dry: when you sell it, if the currency has appreciated against the dollar, you'll earn a profit. If the currency has dropped relative to the dollar, it's a loss. Foreign currency ETFs are bought and sold just like regular ETFs, throughout the day.

Keep an eye on the dollar, though: it strengthened yesterday, reports Madlen Read for the Associated Press. Dropping oil prices and the Dow's close above 13,000 for the first time since Jan. 3 are viewed as signs of optimism.

The options investors have for currency ETFs have exploded. Among the many choices:

• CurrencyShares Australian Dollar Trust (FXA)
• WisdomTree Dreyfus Brazilian Real Fund (BZF)
• ELEMENTS British Pound (EGB)
• CurrencyShares Swedish Krona Trust (FXS)

Depending on your feeling about the dollar - will it continue to strengthen, or is this just a temporary lift? - there's also the PowerShares DB US Dollar Index Bearish (UDN) and the PowerShares DB US Dollar Index Bullish (UUP).

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

How to Invest in Single-Country ETFs

Exchange traded funds (ETFs) that track a single country have have been a boon to many long-term investors. They allow investors to reduce their exposure to specific regional disruptions, such as the recent credit crunch, and they up the exposure available to countries that are profiting more than the United States or other distressed nations.

Global growth has been outpacing that of the United States' for some time now. Evidence of this can be seen just by looking at the performance of the S&P 500: year-to-date, it's down 5%. Its five-year average return is 10.6%, and the ten-year average is 3.9%.

Investors can't be blamed for considering looking abroad for places to put their money. Single-country funds offer more flexibility than mainstream equities, says Alan Farley for The Street.

Overnight gaps that can occur in single-country ETFs can subject them to volatility.

iShares MSCI Mexico (EWW) is an example, as it fell nearly 3% on April 25 because of weak earnings from America Movil (AMX). However, over the past decade, EWW has benefited from Mexico's steady growth in the last decade. Year-to-date, the fund is up 3.6%.

Other ETFs with a strong year-to-date performance include iShares MSCI Brazil (EWZ), which is up 12% and has an annualized return of 55.4% over the last five years;  iShares MSCI Taiwan Index (EWT), up 10.2% so far this year, with an annualized return of 18.6% over the last five years.

Brazil was upgraded yesterday by Standard & Poor's to "investment grade."

These uptrends over time with single-country ETFs are all well and good (hindsight is 20/20, right?), but what if you had bought Brazil in November and sold it in January? You would have been down 50%.

But each single country needs to be evaluated on its own merits. Not all of them are going to go up. When it comes to these funds, educate yourself and monitor the trends closely. Have your sell points set for each, letting it go when it either drops below its 200-day moving average or 8% off its high.

If you stick to the plan, hopefully you will achieve your goal of doing well on the uptrends while avoiding the volatility that occurs from time to time.

Brazil, Latin America ETFs Soar After Investment Upgrade

Brazil's exchange traded fund (ETF) got a big boost after Standard & Poor's rated the country to "investment grade."

The country's continually growing economy and debt reduction are cited as two reasons for the upgrade, reports Rob Wherry for Smart Money.

Brazil once had a volatile economy, but is now enjoying some newfound stability, says the Associated Press. Experts are predicting that the country's typical boom and bust economic cycles are a thing of the past.

The upgrade was hard-earned. In the 1980s, the country defaulted on its debt and declared a moratorium on payments. Now it's booming thanks to exports such as beef, iron ore and soy. Foreign investment is on the rise, companies are making record profits and consumers are taking out loans to purchase cars and homes.

S&P Credit Analyst Lisa Schineller says Brazil appears to be on track for sustained economic growth between 4% and 4.5% this year.

iShares MSCI Brazil (EWZ) and iShares S&P Latin America 40 (ILF) rode the wave, gaining 7.2% and 4.4% yesterday, respectively.

For full disclosure, some of Tom Lydon's clients own shares of ILF.

BRIC ETFs Have Many Access Points for Investors

A reader wrote in recently wanting to know more about BRIC and the related exchange traded funds (ETFs). We're here to help!

BRIC stands for four of the fastest-growing emerging markets out here: Brazil, Russia, India and China. In 2007, these countries delivered some of the biggest returns of any ETFs or exchange traded notes (ETNs) around. So far for 2008, BRIC ETFs and some of the single country funds have been fairly quiet.

But make no mistake: these countries are still growing, and could have plenty to offer down the line.

Foreign Currency ETF Offerings to Pour In Next Month

Exchange traded fund (ETF) providers Dreyfus and WisdomTree are teaming up to offer five actively managed foreign currency ETFs next month.

They will include the WisdomTree Dreyfus Euro Fund, Japanese Yen Fund, Indian Rupee Fund, Chinese Yuan Fund and the Brazilian Real Fund. These will be the first of 12 to be launched under the WisdomTree Dreyfus banner. Two others include two U.S. current income funds, reports Mariana Lemann for Ignites.

Later this year, more funds will launch and cover the Australian dollar, British Pound sterling, Canadian dollar, New Zealand dollar, South African rand and South Korean won. Several of these funds will be a first in currency ETFs.

When they launch, they'll join a growing lineup of both currency ETFs and exchange traded notes (ETNs), including:

• CurrencyShares Euro Trust (FXE)
• CurrencyShares Japanese Yen Trust (FXY)
• Market Vectors Indian Rupee (INR)
• Market Vectors Chinese Renminbi (CNY)
• PowerShares DB G10 Currency Harvest (DBV)

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Oil Prices May Get Worse; Steel and Natural Gas ETFs Are Keeping Pace

The price of oil has slipped some over the last few days, but it's projected to soar even higher - what will it mean for its exchange traded funds (ETFs)?

The reports on fuel got more dismal this morning, as many wonder just how much worse it's going to get. According to an energy report from the Canadian Imperial Bank of Commerce today, oil could hit $225 a barrel by 2012.

Cars are blamed for the continually rising prices: 90% of the demand growth in the last few years has gone to transportation. Car sales globally soared last year, growing 60% in Russia, 30% in Brazil, 20% in China. Sales were flat in Europe and dropped in the United States.

Meanwhile, the oil ETF isn't the only one performing. Steel and natural gas are nothing to turn up one's nose at, either. Gary Gordon for ETF Expert reports that funds for both of the commodities have at least kept pace with United States Oil (USO), if not leaving it in the dust.

In the last month, USO is up 18.6%. Year-to-date, it's up 25.6%. Not too shabby.

United States Natural Gas (UNG) is blowing right past oil, though: it's up 20% in the last month, and 45.2% year-to-date. Market Vectors Steel (SLX) is keeping up: it's up 17.9% in the last month and 17.6% year-to-date.

The question on everyone's minds is whether the U.S. slowdown will eventually catch up to the global markets and put the brakes on demand for these commodities. Gordon says it's possible for some commodities, but he doesn't see steel demand slowing. In China, the number of steel factories has doubled in the last five years.

Global demand for natural gas is also high, but the supplies are plentiful. That begs the question: why has the price been rising? It all traces back to the price of crude oil; it's so expensive that natural gas is one of the alternatives under consideration. It's the cleanest burning carbon-based fuel (unlike coal), and cars powered by natural gas are getting attention from major car makers such as Honda.

Do you find it daunting to focus on a single commodity? Another option is picking a fund diversified over several commodities, such as the Dow Jones Total Commodity Index ETN (DJP) or the iShares S&P GSCI Commodity-Indexed Trust (GSG), which is allocated about 67% in energy, 16% in agriculture, 7% in industrial metals, 7% in livestock, and 3% in precious metals.

Brazil ETF Benefits From Economics and Agriculture

As exchange traded fund (ETF) investors look across the globe for investment opportunities, its hard to not take a second look at Brazil.  The economic leadership has enabled the country to grow and attract new capital, reports Mike Paulenoff of MarketWatch.  In 200, Brazilian companies were the second-largest source of foreign direct investment among developing countries.  The ETF representing the country, iShares MSCI Brazil (EWZ), has been a top performer.  Up 75% last year, and up 8.8% this year.

According to the Economist, Brazil's economy has grown an average of 4.5% since 2004.  When compared to other fast-growing economies, such as Russia, India and China, there are some differences, which give the country an edge.  The Economist notes that the divide between the city and countryside isn't very threatening.  With a multi-party democracy and freedom of expression, social change is easier to negotiate.  Brazil doesn't have the aggressive nationalism that can be seen in the other countries.  Brazil has also faced and dealt with inflation and debt.

As agricultural products continue to rise, Brazil benefits.  They produce and export a large portion of the world's beef, orange juice, soy beans, sugarcane and coffee.

Sugar Might Sweeten Agriculture ETF Performance

Sugar is one commodity whose price remains relatively low when compared with historic highs, but it may not remain that way for long, leaving room to grow for exchange traded funds (ETFs).

Take Baltimore's famous Berger cookies, the price of which one woman recently balked at: $4.59. We can personally attest to the worth-it-ness of that price. The cookies are simple: eggs, milk, sugar, flour and cocoa for that delicious mound of chocolate frosting on the top. Really, you should try them.

The price of all those ingredients has soared in recent months - except for sugar. In "real" terms, the price of sugar has been dirt cheap since the late 1980s, reports Graham Summers for Seeking Alpha.

Blame much of it on a bad reputation: sugar rots your teeth, makes you fat and makes your kids swing from the chandeliers.

But the populations of other countries are beginning to get a sweet tooth as they start eating more like we do (heaven help them), contributing to a demand for sugar that has increased 15% since 2002. Demand is beginning to outpace production: consumption has risen 4%, production has risen 1%.

The biggest sugar consumers per capita are, in order: Brazil, Mexico and Australia, according to Daniel Workman for Suite 101.

The London Stock Exchange has a sugar ETF, ticker symbol SUGA. In the United States, there is sugar futures exposure to be had in the PowerShares DB Agriculture (DBA).

China's Inflation Creates More Opportunity For Other Emerging Market ETFs

China is facing an inflationary trend, and exchange traded funds (ETFs) from competing countries might be able to gain an edge against one of their biggest competitors. Thus far, Chinese growth has relied upon low prices with high top-line sales growth. Low-cost Chinese imports allowed a way to keep inflation at bay.

Carl Delfed for Forbes says the deflationary impact of China on world markets is now becoming an inflationary red flag with implications for global investors. Wages have begun an upward climb, energy is expensive and food prices and demand are exploding. The Chinese Consumer Price Index (CPI) was up 8.7% in just one year.

Delfeld recommends a lean toward countries that are net exporters of commodities instead of net importers like China. iShares MSCI Brazil (EWZ) or the iShares MSCI Hong Kong (EWH) present better opportunities than the iShares FTSE/Xinhua China 25 Index (FXI) ETF.

China's inflationary pressures will create opportunities for other emerging market countries to pick up the slack, such as India. India has two ETFs right now: the PowerShares India (PIN) and Wisdom Tree India Earnings (EPI).

This is an ever-evolving situation, so keep an eye on it. Once these areas head above their trend lines, they could be worth a look.

Latin America, Brazil ETFs Are Bucking the Trend

Most single-country exchanged traded funds (ETFs) are sitting below their 200-day moving averages. Many, particularly those in Asia, are in the double digits in their positions below their trend lines.

Two funds are above, and they're sticking out like a sore thumb: iShares MSCI Brazil (EWZ) and the iShares S&P Latin America (ILF), which are 2.8% and 2.3% above their trend lines, respectively.

How is it that when the rest of the world seems to be dogged by economic woes, Latin America is still continuing to grow and perform relatively well? It turns out, lots of reasons.

1) UK integrators are gravitating toward the region, reports Doug Woodburn for vnunet, and they're setting up shop there.

2) Domestic demand is strong, fueling economic growth, say Carla Simoes and Romina Nicaretta for Bloomberg. Brazil is forecast to create more than 1.8 million government-registered job this year after posting a record last year of 1.62 million. The surge in these types of jobs, which provide full benefits, are considered a sign of Brazil's strengthening economy.

3) Brazil's fourth-quarter growth was 6.2%, surpassing expectations. It's the biggest year-over-year gain since June 2004.

4) Latin America is gearing up for some major infrastructure action, according to Public Works. The Latin American Leadership Forum will be held in early April and will feature the top 50 infrastructure projects that have a total value of $40 billion.

Emerging Market ETFs Could Be Worth a Look In Rough Times

Is it time for exchange traded fund (ETF) investors to take a trip to emerging markets - or anywhere other than the United States for now?

While some stocks are beginning to stir and the markets have been up so far today, thanks to optimism about the Federal Reserve's most recent rate cut, economists are still ready for a slowdown within the U.S. economy for the latter part of 2008.

The problems within the financial markets, in particular, are spreading into the broad stock market and are causing problems that will not go away overnight. One Moody's economist says the United States is 100% in a recession.

If that's the case, it could be time to seriously look elsewhere until this mess plays out.

Economists are favoring the long-term prospects of Brazil, China and India, reports Murray Coleman for Index Universe. China, in particular, has taken a real hit lately, but the prevailing sentiment is that it's not going to be this way forever. Mexico is showing signs that it's emerged from the U.S.' shadow. Russia's influence in Europe's emerging markets should also be watched.

If you're thinking emerging markets might be right for you, you've got many options once the funds move above their trend lines (200-day moving average):

• iShares MSCI Brazil Index (EWZ), down 4.6% year-to-date
• iShares MSCI Mexico Fund (EWW), down 3.1% year-to-date
• Market Vectors Russia (RSX), down 9.1% year-to-date

Even In These Markets, You Can Still Find ETF Movers and Shakers

Yesterday, the markets delivered outstanding performance and some exchange traded funds (ETFs) finished up in the double digits.

But one good day doesn't mean we're out of the slump yet. It's still time to take a defensive stance with your portfolio and make sure you've got that exit strategy firmly in place. But while it seems as though everything is in a downward spiral, but there are still some buying opportunities, believe it or not.

At our asset management firm, we track a list of about 100 ETFs and review it daily to see how things are performing and if there are any trends emerging. Of particular interest to us is which funds are above their 200-day moving averages. We never buy something sitting below that line.

Once we own an ETF, we keep an eye on it to make sure it's still above that line and continuing to perform. Once it dips below the trend line or falls 8% off its high, we sell. No ifs, ands or buts. A sell strategy from which emotions are entirely removed is the only kind that will benefit any investor.

It can be hard to let go of a little mover and shaker you've always had that soft spot for, but if you want to protect your money, you have to. It's like your parents always said when they were grounding you every other week: "This hurts me more than it hurts you." But sometimes it has to be done for everyone's good.

There are no guarantees that when you let a fund go, it's not going to turn around and deliver the numbers again. But that doesn't mean it won't, either. It's exactly why you have to remain as stoic as possible and stick to the plan and rationalize nothing.

There are a number of ETFs sitting well above their trend lines. Take a look at them, keep an eye on them and if they fit into your overall portfolio and are moving in an overall upward direction, they could be well worth considering:

• iShares MSCI Taiwan Index (EWT), 6.2% above
• Claymore/BNY BRIC (EEB), 5.9% above
• iShares S&P Latin America 40 Index (ILF), 10.1% above
• iShares MSCI Brazil Index (EWZ), 13.7% above
• Market Vectors Russia (RSX), 8.1% above
• iShares S&P GSSI Natural Resources (IGE), 6.8% above
• PowerShares DB Commodity Index Tracking Fund (DBC), 27.7% above
• iShares S&P GSCI Commodity-Indexed Trust (GSG), 23.9% above
• United States Oil Fund (USO), 28.3% above
• iShares Dow Jones US Oil & Gas Exploration Index (IEO), 14.4% above
• Energy Select Sector SPDR (XLE), 6.7% above
• iShares Dow Jones US Energy (IYE), 6% above
• Market Vectors Steel (SLX), 14.4% above
• iShares COMEX Gold Trust (IAU), 21.2% above
• streetTRACKS Gold Shares (GLD), 21.1% above
• Market Vectors Gold Miners (GDX), 16.5% above
• iShares Silver Trust (SLV), 30.3% above
• SPDR S&P Metals & Mining (XME), 11.5% above
• PowerShares DB Base Metals (DBB), 8.5% above
• PowerShares DB Agriculture (DBA), 30.8% above
• Market Vectors Global Agribusiness (MOO), 11.4% above
• CurrencyShares Euro Trust (FXE), 6.9% above
• CurrencyShares Swiss Franc Trust (FXF), 10.2% above
• CurrencyShares Japanese Yen Trust (FXY), 8.5% above

For full disclosure, some of Tom Lydon's clients own shares of EWT, IEO, DBB and DBA.
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Brazil Is Tranquil Amid US Turmoil; ETF Stays Solid

Brazil remains confident and poised, convinced that a U.S. recession will not affect neither the thriving domestic markets nor its related exchange traded fund(ETF). President Luis Inacio Lula da Silva said they are well-prepared to weather a United States recession because of thriving markets domestically, diversified exports and the elimination of foreign debt.

Alan Clendenning for Associated Press reports that Latin America's largest economy is basking in a prolonged boom because of global demand for Brazilian ethanol, iron ore and agricultural products. Its gross domestic product (GDP) is expected to grow at least 5% per year through 2010, as big-ticket items such as homes and cars are readily consumed. Their domestic market is around 190 million consumers and growing.

People are buying more and exports are growing since Brazil does not depend on the United States and Europe alone anymore. Exporting is on a more global level and this leaves Brazil tranquil in the face of an American crisis.

For single-country exposure, check out the iShares MSCI Brazil Index (EWZ). It's up 4.5% year-to-date, and up 21.1% since Jan. 22.

For full disclosure, some of Tom Lydon's clients own shares of EWZ.

Both Bellies and Agriculture ETFs Benefit From Whole Grains

Whole grains are good for you, and agriculture exchange traded funds (ETFs) could be, too.

The planting season is just around the corner. With that is the result of a study showing that people can lose weight by loading up on whole grains, reports Reuters Health. The grains are heart-healthy and help dieters shed excess belly fat. We Americans love finding new ways to battle the bulge, so perhaps a run on whole grain products such as brown rice, barley and oatmeal is around the corner.

The results of the study are perfect timing. The PowerShares DB Agriculture (DBA) is weighted in corn, wheat, soybeans and sugar. Michale Ferrari for Seeking Alpha reports that more wheat is being planted in response to the growth in demand for the product, which is edging out corn and soybeans.

Market Vectors Global Agribusiness ETF (MOO) will feel the effects of this push and pull between the various types of agriculture.

As for the agriculture situation around the world:

• In South America, heavy rains and cooler temperatures will benefit corn and bean crops. The rest of the month could remain dry in Argentina, which will hurt the soybean crop.
• In the EU, a cool, dry week shouldn't have a negative effect on dormant EU oilseeds.
• India's outlook is dry, and as the oilseed pods are being set, they could use more moisture.
• Thanks to heavy snow and freezing rain in China, wheat and oilseed crops are going to be lost in the northern and easter regions. Recent estimates place more than 4 million hectares of land in the "suffered significant damage" category.

Latin America ETFs Have Stability and Growth to Their Name

We're only six weeks into the year, and the U.S. markets and related exchange traded funds (ETFs) have gotten off to a slow start. The domestic markets are down anywhere from 7-12%.

But emerging markets are another story. Sure, they carry more risk, but they also have been holding their ground where relative strength is concerned. Matthew D. McCall for Seeking Alpha points out that iShares Malaysia (EWM) is the only single-country ETF showing a positive return, up 4% year-to-date.

The next three top performers are all in Latin America:

• iShares Mexico (EWW), down 1%
  
• iShares Chile (ECH), down 2.3%
  
• iShares Brazil (EWZ), down 2.5%

Southeast Asian countries are considered of "above average" risk, while others are considered "top heavy" in the political system. In contrast, Latin America looks good because of its relatively stable government, richness in commodities and concentration in growth. In a rough patch, it can be good to look for relative strength in ETFs by comparing them to their peers.

If you can't decide which Latin American country will perform, another route to take is the iShares S&P Latin America 40 ETF (ILF). It has a concentration in materials and energy (52%) in one fund, and year-to-date, it's up 3.4%.

For full disclosure, some of Tom Lydon's clients own shares of EWZ.

Sector Rotation In A Global ETF Portfolio

  Adapting your investment strategy with exchange traded funds (ETFs) is important when economies around the world are becoming more interrelated.

Doing so will add value and increase the chance of outperforming benchmarks, reports  Carl Delfeld for Index Universe. The wheres of a company is also becoming less important as the industries and sectors which it operates is taking center stage.

The basics of global indexing, says Delfeld, are take the S&P Global 1200, a composite of seven indexes that represent leaders in their respective regions. The market values of the 1200 companies in the indexes represent around 70% of the world's capital markets with a market value of $28 trillion or more. Here is a brief breakdown:

• The S&P 500 covers 75% of U.S. markets.
• The S&P Europe 350 covers 70% of the region's market cap across 17 countries.
• S&P/TOPIX 150 covers 70% of the Japanese market.
• S&P/TSX 60 offers exposure to 60 large-cap, liquid Canadian companies.
• S&P/ASX All Australian 50 is comprised of 50 liquid, domestic-oriented Australian companies.
• S&P Asia 50 covers 50 leading companies in Asia ex-Japan domiciled in Hong Kong, South Korea, Taiwan and Singapore.
• S&P Latin America 40 is a basket of 40 companies from Argentina, Brazil, Chile and Mexico which offers exposure to 70% of the regions' market cap. It is heavily weighted to Brazil and Mexico.

By using a top-down macro analysis of studying market-cap global sector weightings, a global sector rotation method can be useful in a growth portfolio. The weakness is that smaller countries get less weighting, and the traditional market-cap weighting which gives trademark exposure to emerging markets.

What's Behind the Activity in the Steel, Metals and Mining ETFs?

Two exchange traded funds (ETFs) posted stellar numbers this week. What's behind all the movement?

Market Vectors Steel (SLX) is up 7.2% this week and up 18.4% since Jan. 22. One possible factor in the upswing is that the world's largest steel maker, ArcelorMittal MT, said it was set to raise steel prices in the United States and Europe. ArcelorMittal MT is the fund's top holding, at 14.9%, and it produces 10% of the world's global steel output.

Steel demand is booming worldwide, reports Newstex, and nearly all steel makers are expanding their operations to accommodate the demand. Matthew Hill for Mining Weekly says that China's growth, in particular, is a strong factor in the metal's demand. In fact, Chinese steel production could double by 2012.

Other fast-growing economies throughout Latin America, Eastern Europe and Russia will place extra demand on steel, too, as they call for more cars, buildings and machines. Brazil, in particular, is a major source of demand right now.

Then there's the overall feeling in the steel industry that it will be able to weather any kind of global economic downturn, report Aoife White and Matt Moore for the Associated Press.

Another ETF with similar returns of late is the SPDR S&P Metals & Mining (XME). In the last week, it's up 5.7%, and since Jan. 22 it's up 20.1%.

On top of some holdings in steel, the fund also has several companies that deal in coal mining - a major component in the production of steel.

Put the two together, and an interesting story is revealed.

Brazil ETF Shaking Things Up

It is hard to determine what moves a broad group of stock so much that an exchange traded fund (ETF) will move sharply, but one factor could be that the major holdings are concentrated. This can lead to volatility.

Emerging market and country-specific funds are particularly prone to that correlated effect. iShares MSCI Brazil Index (EWZ) is an example, as just in the last 24 hours there have been multiple things going on in Brazil:

• Goldman Sachs gave Brazilian bank stocks an “attractive” rating
• Yesterday’s inflation number was lower than expected
• Industrial output numbers for 2007 were released, and it was a better-than-expected 6%
• Soybean and corn production will rise more than previously forecasted in an attempt to meet demand.

Will Swarts for SmartMoney reports that while ETFs are great vehicles for short-term traders, that doesn't necessarily make EWZ efficient for smaller-scale investors. Small investors shouldn't sweat the day-to-day movement so much.

By watching the 200-day moving average and seeing how an ETF is performing relative to that range, it's easy to set up stop-loss orders and avoid any sort of sudden collapse, which is a worry for emerging markets investors.

You have to take a longer view with an ETF as an individual investor. You're basically buying an index and that's a very easy way to get some diversification.

Brazil is hitting all the sweet spots right now, but that's not going to happen all the time. Emerging markets have had a great run and the growth in these regions will continue.

Latin America, overall, has been showing nice performance since Jan. 22:

Latin America Discovery Fund (LDF), up 13.8%
iShares S&P Latin America 40 Index (ILF), up 12.1%
iShares MSCI Mexico Index (EWW), up 10.5%

BRIC ETFs Caught In Gap Between Perception and Reality

The consistency of economic strength is still being determined among investors of BRIC (Brazil, Russia, India, China) exchange traded funds (ETFs).

Pierre Daillie for Seeking Alpha says that at best, the general sentiment surrounding emerging markets has remained skeptical, and this is why the market has been absorbing the BRIC investment story with a grain of salt. Is their credit worthiness being overlooked?

Right now, emerging markets have a current account surplus of $700 billion, and longer term surpluses of $3 trillion are found on balance sheets of BRIC countries in the form of Foreign Exchange and trade surpluses.

BRIC countries have been financing the debt and driving the growth of the G7 countries for the last 5-7 years. This makes their relationship a symbiotic one.

Furthermore, the idea of emerging markets being highly correlated to U.S. markets has been overplayed, Daillie says. The correlation is there, but it is low, at .30-.40. Emerging markets will sustain, and some of their current growth and inflationary pressures may benefit from a U.S. slowdown.

The four of these are "total" emerging markets funds that give broad-based exposure to any portfolio:

• iShares MSCI Emerging Markets (EEM)
• PowerShares FTSE/RAFI  Emerging Markets Portfolio (PXH)
• SPDR S&P Emerging Markets (GMM)
• Vanguard Emerging Markets (VWO)

If Russia Makes Friends, ETF Could Benefit

Could Russia's diplomacy be hurting its opportunities for foreign investors and its exchange traded funds (ETFs)?

The Kremlin admitted that it is, reports Ambrose Evans-Pritchard for the Telegraph. It said that the country's hard-nose diplomacy and manipulation of the energy sector for political goals deters investors and has left the country friendless.

Finance Minister Alexei Kudrin said that tiffs with Europe and the United States have gone too far. Kudrin acknowledges that Russia is dependent on global economic ties and that the time to safeguard stable investment is now. A former Kremlin official said that Russia needs to think about what its foreign policy is actually costing its economy.

Although the country has the world's third-largest reserves at $470 billion, officials are still concerned about lurking risks. Companies have had to borrow heavily overseas to raise capital because the internal bond market can't keep pace with growth. The credit crisis is spreading to the country.

Market Vectors Russia (RSX) is down 8.2% year-to-date. If Russia begins to make nice with other economies, maybe a turnaround is in the offing.

Russia is also a small component of several BRIC (Brazil, Russia, India, China) funds, if you're seeking more diversified exposure.

• iShares MSCI BRIC Index (BKF)
• Claymore/BNY BRIC (EEB)
• SPDR S&P BRIC 40 (BIK)

BRIC ETF Sees Challenges, But It Still Offers Diversification

In 2007, BRIC-centric exchange traded funds (ETFs) were powerhouses. So far, 2008 is telling a different story.

The Claymore/BNY BRIC Fund (EEB) has seen challenges in some of its four countries - Brazil, Russia, India and China. From its all-time high, it's down 19%, reports Gary Gordon for ETF Expert, and the gains upward of 65% in 2007 feel like a memory. Year-to-date, the fund is down 10.7%.

Take heart, though: it's still above its long-term trend line (200-day moving average).

  Gordon feels that the fund is still attractive, though: it has a low price and allows investors access to all four emerging markets without being overweight in any single country or having to purchase four separate ETFs. It takes the guesswork out of trying to pinpoint which emerging economy is going to perform.

WisdomTree Could Launch Money Market ETFs

WisdomTree filed for 12 new money market exchange traded funds (ETFs) to cover 17 different foreign and emerging markets. The new funds are similar to the Rydex CurrencyShares funds with two major differences:  (1) They cover many new global markets, and (2) They are money market funds.

Murray Coleman for Index Universe on Seeking Alpha reports that the total number of currency funds available will be 17, representing currencies from almost every major market in the world. Several currencies will be accessible by investors for the first time, including the Brazilian real, Chinese yuan and the South African rand.

Another addition from WisdomTree includes the WisdomTree Developing Markets Fund which proposes to make short-term investments in money market instruments from 10 emerging markets: Brazil, Chile, China, Czech Republic, Hungary, India, Poland, South Korea, Taiwan, and Turkey. This fund is also being titled actively managed, with an average maturity of around 60-90 days.

This will allow investors to put their money in an investment outside the U.S. in a liquid and safe environment.

Read the disclosure, as Tom Lydon is a board member of Rydex Investments.

Latin America and ETF Are Rich in Resources

One person who's been to Latin America many times over the years has witnessed the changes that have played a part in the continent's growing exchange traded funds (ETFs) firsthand.

Martin D. Weiss for Money and Markets has gone back and forth to the region since the age of six in 1952. Back then, the United States was the strongest in the world, and the products manufactured here were craved by citizens of every country. Brazil's products were of poor quality. On top of that, there were no paved highways, no gas stations, few services.

My, how things have changed.

Today, the United States is the country with the economic problems as our credit crisis worsens and the housing bubble deflates. Brazil, on the other hand, now leads the world in developing and discovering new sources of energy. Its currency is among the strongest in the world.

Brazil's ETF, the iShares MSCI Brazil (EWZ), is up 275% over the last two years, while the Dow is up 26% over the same period. Weiss says that while their markets appear to follow ours on a day-to-day basis, Brazil is still a country to keep an eye on.

Brazil's ETF Could Retain Its Looks Through 2008

Brazil is generally known as the land of really good-looking people, and that tendency toward good looks extends to its exchange traded fund (ETF).

The iShares MSCI Brazil Index (EWZ) was among the top performers for 2007, and Dave Mock for the Motley Fool takes a good look at the fund for investors who might be interested in hitching a ride.

Three sectors make up the top five holdings in the fund: energy (25.1%), industrial materials (22.6%) and financial services (6.1%).

Mock takes a look at some of the top-performing stocks in the fund and uncovers even more burgeoning industries in Brazil that could keep the fund in solid shape. Several wireless stocks have doubled in 2007, and the country's largest cellular service provider in the country is investing heavily in expanding its network. Oil is another area singled out to potentially be a strong performer in the country this year. Petroleo Brasileiro, the fund's number one holding at 13.6%, not only has a monopoly on exploration, refining and production, but it holds extensive rights to oil and gas reserves around the world.

December and Year-End ETF Performance Report

It was an eventful year for the markets and exchange traded funds (ETFs) as we saw the Dow break new records, closing above 14,000, only to have the sub-prime mortgage debacle take a toll on the markets.

The domestic challenges kept returns low for the major market indexes, but global markets continued to benefit from growth and expansion.  While the Dow was up 6.4%, the S&P 500 gained 3.5% and the Nasdaq 9.8%, the BRIC (Brazil, Russia, India, China) country ETFs soared 60-86%.  Steel also benefited from global expansion and was up over 80%.

Click here to view the December, year-end ETF Performance Report.

2007's Top ETF Performers

After all of the global expansion we saw throughout 2007, it's no big surprise that exchange traded funds (ETFs) tapping into those markets remained the strongest performers.

BRIC ETFs Are No Lightweights

Matt Krantz at USA Today touts the value of a BRIC-related exchange traded fund (ETF). As the U.S. economy puts on the brakes, the BRIC countries (Brazil, Russia, India, China for those just joining us) are looking good. Their economic growth is predicted to continue into the near future, thanks to growing populations, bustling city centers and a wealth of natural resources.

Sure, you could just track the individual stock markets of those countries. But investing in an ETF that kills four birds with one stone is probably a less cumbersome use of your time.

• SPDR S&P BRIC 40 (BIK), up 28.8% since its inception on June 22
• iShares MSCI BRIC Index (BKF), down 0.2% since its inception on November 20
• Claymore/BNY BRIC (EEB), up 51.3% year to date

BRIC ETF Comparisons

There are several BRIC (Brazil Russia India China) exchange traded funds (ETFs) to choose from, so which is the best choice?  Matthew D. McCall for Seeking Alpha reports that what's inside is just as important, if not more so, than fees.

SPDR S&P BRIC 40 ETF (BIK) has an expense ratio of 0.5%.  BIK is made up of 40 stocks and the top 10 make up 55% of the portfolio.  The country breakdown is as follows: China 44%, Brazil 26%, Russia 25% and India 6%.

iShares MSCI BRIC Index ETF (BKF) has an expense ratio of 0.75%. BKF has 124 stocks, with the top 10 making up 36% of the ETF. Country weightings are: China 36%, Brazil 28%, Russia 20% and India 16%.

Claymore's Bank of New York BRIC ETF (EEB) has an expense ratio of 0.6%.  EEB has 75 stocks in its portfolio, and the breakdown is: Brazil 46%, China 39%, India 11% and Russia 4%.

Knowing your financial goal is important in selecting an ETF.  If you want exposure to Russia, then EEB may not be the right choice for your portfolio.  Make sure your objectives are in line with the ETF's holdings.