Holdings: EEG holds companies domiciled in emerging markets; some of the top companies in the fund include Russian natural gas company Gazprom, Brazilian energy company Petroleo Brasileiro, Latin American wireless provider America Movil and Bank of China.

Objective: EEG seeks to track the Dow Jones Emerging Markets Titans Composite Index, which is an index composed of a representative sample of 100 emerging market companies deemed by Dow Jones to be leaders in each of 10 sectors.

Things to Know

• Brazil is the top country, with 24.9% of the weighting. China has 24.3%, Russia has 13.4% and India has 13%. Other countries include Mexico, South Africa, Chile and Indonesia.
• Oil and gas is the top sector, weighted at 30.8%; financial is 22.1%; telecommunications is 11.6%; and basic materials is 9.3%.
• The expense ratio is 0.75%.
• EEG is a relative newcomer on the ETF scene – the fund launched on July 22.

The Latest News

• Emerging Global Advisors CEO Bob Holderith feels that interest in emerging markets should continue to expand. “It’s a 25-year growth story in its sixth year.” The positive growth outlook for emerging markets goes hand-in-hand with the changing demographic picture in these countries.
• Holderith notes that in most of these countries, there’s a huge young population, all looking for the “Western experience”: cell phones, iPods, dining out and more. (More on Emerging Global Advisors).
• Although the pace may eventually slow down, Barron’s reports that emerging markets still have room left to grow in the long haul. And for the time being, they may be the place to hide out as developed markets still work toward normalcy.
• Emerging markets already account for one-third of the global GDP and 10% of the world’s market capitalization.

The current supply of copper looks like it may be dropping and steel producers may be flooding the market.

Copper prices jumped more than 3%, hitting a 13-month high on Wednesday, and BHP Billiton (NYSE: BHP) declared force majeure at the fourth-largest copper mine in the world, reinforcing supply concerns, writes Barani Krishnan and Rebekah Curtis for Reuters. Copper, along with other commodities, rallied as the dollar dipped.

Copper futures for the December delivery finished at $3.0360 per pound on the New York Mercantile Exchange -  the last time copper hovered around $3 dollars was in September 2008. (For more information on copper, visit our copper category.)

China Steel, Taiwan’s foremost steel producer, will reduce its domestic price by 4.5% in December, indicating that steel prices could be bottoming out. The company expects steel outlook to improve in 2010 as world economies recover, reports Ken Wills for Reuters.

Analysts are not surprised by pullbacks in the benchmark hot-rolled sheet in coil (HRC) steel price as a result of weak end-use demand, comments Tom Stundza for Purchasing. Production has increased to almost 62% of capacity despite August U.S. steel mill shipments being down 37% from last year.

In a survey of steel buyers, 77% of participants think current inventory levels are sufficient for one or two months and 76% don’t plan on increasing steel orders. Over the next month, 24% expect incoming orders to decline, and 46% expect incoming orders to decline in the next three months. (For more information on steel, visit our steel category.)

Fore more information on industrial metals, visit our industrial metals category.

• iPath DJ AIG Copper TR Sub-Idx ETN (NYSEArca: JJC): up 112.7% year-to-date

• Market Vectors Steel ETF (NYSEArca: SLX): up 96.6% year-to-date

• iShares MSCI Chile Investable Mkt Idx (NYSEArca: ECH): up 67.4% year-to-date; materials constitutes 20.7%, including mining companies

Max Chen contributed to this article.

James Campbell of The Wall Street Journal reports that China’s State Reserve Board holds at least 235,000 metric tons of copper, nearly as much as the London Metal Exchange warehouses hold to back futures trading. The nation as a whole holds nearly one million tons of copper in total, the amount equivalent to a month’s global consumption.

Many feel that China can’t possibly keep stockpiling and driving up the price of copper.  After all, an official from China’s National Development and Reform Commission last month said that stockpiling has come to a halt. So does this mean that copper will lose its luster?

(Graphic courtesy of The Wall Street Journal)

On the other hand, copper is still relatively cheap and China may continue to keep stockpiling despite what reports have indicated. Additionally, the demand for the bronze-colored metal may be further boosted in the nation as a result of investment in power-generation capacity, a recovering construction industry and surging car sales.

• iPath DJ-AIG Copper Total Return Sub-IndexSM ETN (JJC): up 69.3% year-to-date and trading above its 200-day moving average.

• iShares MSCI Chile Index Fund (ECH): up 59.7% year-to-date and trading above its 200-day moving average; Chile is the world’s largest exporter of copper.

For more stories on copper, visit our copper category.

Kevin Grewal contributed to this article.

In Japan, the country’s exports and industrial production is on the mend. Analytical data points to an economy that is bottoming out, which has led to a Japanese small-cap rally. Small-cap companies tend to be more capable of adapting to the changing economic environment.

• SPDR Russell/Nomura Small Cap Japan (JSC): up 4.6% year-to-date; up 6.8% in the last month

• iShares MSCI Japan Small Cap Index (SCJ): up 3.4% year-to-date; up 5.1% in the last month

Thailand is another country that is starting to climb out of its economic hole. Spurred by government spending, job creation is on the rise. If there are any hiccups in the stimulus efforts, a second package is at the ready. Meanwhile, Thailand’s Prime Minister Abhisit Vejjajiva said he believes the country’s economy will post a positive growth rate by the end of this year.

• iShares MSCI Thailand Invest Mkt Index (THD): up 41.8% year-to-date; up 6.1% in the last month

Most experts note the recovery in world economies will start in emerging markets. These countries will be moving independently from developed countries.

• Claymore/BNY Mellon Frontier Markets (FRN): up 28.4% year-to-date; up 7.7% in the last month

Chile has been blessed with natural resources and the country is reaping the benefits of its commodity cache. The country’s financials are in order and Moody’s increased the country’s credit rating on an optimistic outlook. Its economy is only getting stronger with a GDP that rivals most Latin American countries, a decreasing poverty rate and increases in public spending.

• iShares MSCI Chile Investable Mkt Idx (ECH): up 53.3% year-to-date; up 3.3% in the last month

Max Chen contributed to this article.

Indonesia boosts some solid basic fundamentals including a reform minded government, an upwardly mobile population, a healthy banking system and a resource-rich economy. But that doesn’t mean Indonesia’s ETF is without risks. The country was also one of a lucky few that posted a positive growth for the first quarter. Morgan Stanley feels that Indonesia should be included in the BRICs (Brazil, Russia, India and China), to form the BRIICs.

• Market Vectors Indonesia ETF (IDX): up 70.8% over three months

Chile is comfortably positioned for the eventual recovery of global economies as a global exporter of copper. The country’s GDP is holding up, the poverty rate is going down and growth is expected to rise on increased public spending. Economists expect Chile to sidestep a recession, and by year’s end, it could be one of the world’s 30 richest countries

• iShares MSCI Chile Index (ECH): up 51.9% year-to-date

Peru is one of the most recent countries to enter the ETF family. The latest ETF from iShares is the MSCI All Peru Capped Index Fund (EPU) which has an expense ratio of 0.63%. The ETF tracks the MSCI All Peru Capped Index. Peru touts the lowest annual inflation of any other Latin American country and has low fiscal and external threats. Direct investment is on the rise and the trend could continue well throughout 2009. Peru’s credit rating is higher than that of Brazil’s.

• MSCI All Peru Capped Index Fund (EPU)

For more information on emerging market countries, visit our emerging markets category.

Max Chen contributed to this article.

Gary Gordon for ETF Expert explains the differences between Chile’s ETF and its closed-end fund, The Chile Fund (CH), and how the performance of the two funds compare now that the economy appears to be recovering.

Meanwhile, let’s look at some of the reasons why many investors could begin to find Chile appealing once again after a slowdown that left no emerging market untouched.

• Chile is the world’s strongest exporter of copper, a metal that stands to benefit from a global recovery, thanks to its copious use in wiring and pipes
• Its gross domestic product (GDP) is as strong as any in Latin America
• Its budget is being kept in check
• By year’s end, Chile may be the first South American country to join the list of the world’s 30 richest countries, writes Andres Oppenheimer for The Miami Herald
• Its economy has grown steadily for the last two decades
• Chile boasts a poverty rate of 13%, down from 39% in 1990
• Chile just boosted public spending by $5.7 billion this year to boost growth

• iShares MSCI Chile Index (ECH): up 54.6% year-to-date

For more stories on Chile, visit our Chile category.

The newly created iShares Emerging Market Infrastructure Index Fund (EMIF) offers investors even more exposure to emerging markets.  It isn’t the first of its kind, though. PowerShares offers the Emerging Market Infrastructure Portfolio (PXR) but its composure is much different than that of EMIF in that it is broader and holds companies that do business in emerging markets, such as Ingersoll-Rand (IR), states Roger Nusbaum for TheStreet.

As for the newly created EMIF, its industry breakdown favors transportation infrastructure, which makes up 33% of the fund’s assets; electric utilities which makes up 26% of its assets; and energy equipment, which makes up 20% of its assets.  Additionally, it is unique in that 9.1% of its assets are allocated to the following index funds: the iShares MSCI Malaysia (EWM), the iShares MSCI South Korea (EWY) and the iShares MSCI Chile Investable Index (ECH). The reason that EMIF holds the three aforementioned indexes has to do with the ETF creation and redemption process and the three countries don’t allow for so called in-kind transfers, a characteristic of ETFs that makes them tax-efficient.

In regards to exposure to markets, China is the largest at 33%, followed by Brazil at 14%.  It also has ample exposure to Argentina at 9% and the Czech Republic at 7.5%.  Of the 25 stocks held by the ETF, 10 are in Chinese companies. China is also the largest component of PXR at 20.2%, followed by Brazil at 9.3% and South Africa at 8.7%.

Both PXR and EMIF enable investors to take advantage of the affects of China’s massive stimulus package.  Most Chinese ETFs are heavily concentrated on the financial sector and not infrastructure, the big recipients of Chinese investment.

The two other global infrastructure ETFs available are iShares S&P Global Infrastructure (IGF) and SPDR FTSE/Macquarie Global Infrastructure 100 (GII).

For more stories on infrastructure ETFs, visit our infrastructure category.

Kevin Grewal contributed to this article.

Why should investors consider single country funds? These country funds allow for some commodity exposure and provide a little more diversity over picking a single commodity fund. Potential investors should note that some funds are heavily weighted in commodities and their economies could be too dependent on them – Russia energy dependence is a prime example. It is worth the extra few minutes to peruse the finer details of specific country funds.

While there are many different commodity-rich countries to choose from, these are just some examples of countries that are rich in commodities.

South Africa. This country’s miners are the largest producers of platinum, gold and chromium. South Africa is an emerging market with a large middle-class. They have natural resources; developed financial, legal, communications, energy and transport sectors. But there is a high level of joblessness and poor infrastructure does constrain growth. The government tries to control inflation, have budget surpluses and create jobs through government-owned enterprises.

• iShares MSCI South Africa Index (EZA): up 3.9% year-to-date; materials is 29.7%

Chile. Its economy favors foreign trade and it has healthy financial institutions. Commodities make up around 75% of total exports and exports are 40% of GDP. Copper is a main staple of the country, which accounts for 33% of government revenue. The government adheres to a counter-cyclical fiscal policy by holding wealth from trade surpluses during economic growth, and goes into deficit spending when there growth is low or copper prices are down.

• iShares MSCI Chile Investable Mkt Idx (ECH): up 18.9% year-to-date; materials is 19.5%

Russia. Since 2000, Russia has improved its financial sector and they had high trade surpluses. But the positive trends started to reverse itself in the second half of 2008. Their banks are now faced with liquidity problems. The economy is heavily reliant on energy and raw materials. Investors are wary of the country’s corruption, institutions and exchange rates.

• Market Vectors Russia ETF (RSX): up 30.1% year-to-date; gas & oil is 40.2%

Australia. This is the world’s largest net exporter of coal. Australia has a high per capita GDP. The government focuses on reforms, low inflation, housing market and ties with trading partners like China. In recent years, their exporters of raw materials and agricultural products enjoyed the high prices of commodities. The government may also provide a fiscal stimulus to deter slow growth in 2009.

• iShares MSCI Australia Index (EWA): down 0.1% year-to-date; materials is 25.6%
  

Max Chen contributed to this article.

• Falling supplies. Inventories in warehouses monitored by the Shanghai Futures Exchange dropped 18% to their lowest point since early February, reports Reuters.
• China. They’re the world’s largest copper consumer. Excitement over the country’s $585 billion stimulus plan and its potential to spur industrial production has many optimistic about the future outlook for the metal, which is a major component in industrial production.
• Increased lending. New loans in China increased more than sixfold in March from a year ago. There’s speculation that increased lending will spur inflation, making copper more attractive as a hedge.
• More shipments. Inbound shipments of the metal to China jumped 14% in March from February as buyers take advantage of low prices.

• iPath DJ AIG Copper TR Sub-Index ETN (JJC): up 49% year-to-date

• iShares MSCI Chile (ECH): up 21.2% year-to-date; copper makes up 50% of Chile’s total exports

The Tactical Investor on Seeking Alpha notes the typical thinking that the economy usually mimics the copper markets. If this is true, copper could be sending some signals that there’s a change in the market’s direction in the offing.

During the last big correction earlier this decade, copper hit a  bottom in late 2002. While history should not be your sole guide for investing, since every situation is unique, it’s interesting to note.

Today, copper has erased its recent declines as of midday, reports Anna Stablum for Bloomberg. Copper could be heading for $4,450 a ton, one broker notes. Prices today are currently at $4,382.50. Inventories of the metal are rising fast – 48% so far this year. While stockpiles are rising, many are looking at China, which has been buying large amounts of the metal. China is the world’s biggest copper consumer.

The metal is an indicator of future global growth because of its use in plumbing and wiring. In the first quarter of this year, copper rallied 31% and was the second-best performer after gasoline.

• iPath DJ AIG Copper TR Sub-Index ETN (JJC): up 41.4% year-to-date

• iShares MSCI Chile (ECH): up 17% year-to-date; copper makes up 50% of Chile’s total exports