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. In the near-term, growth rates in developed nations are expected to be lackluster, and much less robust than those in the developing world’s. (What you’re missing when you’re not globally invested).

Countries that are resource rich and developing are stockpiling cash and shoring up their balance sheets for a strong recovery and a growth spurt unlike any seen before. Earnings and  economic activity have been revived. Morgan Stanley feels that earnings in emerging markets have bottomed in the third quarter and they’re now set to climb again. (Why frontier markets could be even bigger).

For more stores about emerging markets, visit our emerging markets category.

There are a variety of ways to play emerging markets. There are broad funds, such as iShares MSCI Emerging Markets (NYSEArca: EEM), Vanguard Emerging Markets (NYSEArca: VWO) and iShares MSCI EAFE Index (NYSEArca: EFA).

There are funds that focus on regions, such as Claymore/BNY Mellon BRIC (NYSEArca: EEB) and BLDRSAsia 50 ADR Index (Nasdaq: ADRA).

Finally, there are single-country funds, such as iShares MSCI Brazil (NYSEArca: EWZ) and Market Vectors Vietnam (NYSEArca: VNM).

Keep in mind that the narrower you get in your exposure to emerging and frontier markets, the higher your risk will be. Be sure to have an entry and exit strategy before you invest. (How to follow trends).

ETF trading volume jumped from $142 billion in 2004 to $3 trillion in 2008, and settling around $1.4 trillion in June 2009, write Yan Zilbering and Donald Bennyhoff for IndexUniverse. Since 2008, nost of the ETF trading volume has been centered around a narrow selection of ETFs from the 850 or so available as of June 2009.

The top 20 most heavily traded ETFs by dollar volume amount to around 80% of total ETF trades. At the forefront are the most established ETFs with the most assets that are popular among investors of all types. The included ETFs account for about 50% of all ETF trading volume and they track the most common, broad-based domestic indexes:

• SPDRs S&P 500 (SPY): avg. daily turnover since Jan. 2008 is 43%
• PowerShares QQQ (QQQQ): avg. daily turnover since Jan. 2008 is 43%
• iShares Russell 2000 Index (IWM): avg. daily turnover since Jan. 2008 is 54%
• DIAMONDS Trust, Series 1 (DIA): avg. daily turnover since Jan. 2008 is 28%

There are also a group of nine narrowly focused sector and sub-sector ETFs, which represent around 16% of ETF trades, used to implement various strategies through the easy access of specific areas of the market.

• Financial Select Sector SPDR (XLF): avg. daily turnover since Jan. 2008 is 45%
• Energy Select Sector SPDR (XLE): avg. daily turnover since Jan. 2008 is 40%
• Oil Services HOLDRs (OIH): avg. daily turnover since Jan. 2008 is 54%
• SPDR Gold Shares (GLD): avg. daily turnover since Jan. 2008 is 6%
• iShares Dow Jones US Real Estate (IYR): avg. daily turnover since Jan. 2008 is 58%
• iShares MSCI EAFE Index (EFA): avg. daily turnover since Jan. 2008 is 4%
• iShares MSCI Emerging Markets Index (EEM): avg. daily turnover since Jan. 2008 is 12%
• iShares FTSE/Xinhua China 25 Index (FXI): avg. daily turnover since Jan. 2008 is 20%
• iShares MSCI Brazil Index (EWZ): avg. daily turnover since Jan. 2008 is 18%

The last set includes seven leveraged ETFs, which produce the multiple or inverse returns of the broad market or sector. This group is usually used for capitalizing on the short-term movements in the markets.

• Ultra S&P500 ProShares (SSO): avg. daily turnover since Jan. 2008 is 61%
• UltraShort S&P500 ProShares (SDS): avg. daily turnover since Jan. 2008 is 109%
• Ultra QQQ ProShares (QLD): avg. daily turnover since Jan. 2008 is 90%
• UltraShort QQQ ProShares (QID): avg. daily turnover since Jan. 2008 is 178%
• UltraShort Financials ProShares (SKF): avg. daily turnover since Jan. 2008 is 242%
• Direxion Daily Financial Bull 3X Shares (FAS): avg. daily turnover since Jan. 2008 is 128%
• Direxion Daily Financial Bear 3X Shares (FAZ): avg. daily turnover since Jan. 2008 is 241%

By looking at the data, it is noticeable that the more heavily traded ETFs traded at a higher turnover rate. ETFs tracking volatile sectors have been traded at even higher levels.

Max Chen contributed to this article.

A few tips, courtesy of both ETF Trends and John Spence for MarketWatch:

• The so-called plain-vanilla ETFs are the funds that should be remembered when you’re getting started, regardless of your age. After the recent market meltdown, the leveraged and inverse ETFs have been hogging the headlines. Broadly diversified funds have gotten lost in the mess.
• ETFs sporting rock-bottom fees and tracking wide swaths of the market are better tools for most investors, and can help build a broadly diversified portfolio. For many individual investors, depending on your goals, it may be all you need.
• A core portfolio will create a diverse mix of asset classes, spreading risk out and slowly building wealth over time. This strong mix will get investors through both a bear and a bull market as well.
• Investors who want to take a more hands-on approach should have a strategy for getting in and out of positions. Buy-and-hold is a strategy that has burned many investors recently; the time to take charge is now. By creating specific entry and exit points, you give yourself a chance to take a position in time for a potential long-term uptrend, while limiting your losses on the downside.

Among the many broad-based ETFs:

• SPDR (SPY): up 10.2% year-to-date

• Vanguard Total Stock Market (VTI): up 12% year-to-date

• iShares MSCI EAFE Index Fund (EFA): up 12.8% year-to-date

For more stories about ETF investing, visit our ETF 101 category.

Ron Rowland for JutiaGroup lists these six ETFs that you must get to know. Rowland’s caveat is that he isn’t saying buy them right now. But know them. They’re among the largest and most liquid ones on the market today:

• SPDR S&P 500 (SPY): up 12.6% year-to-date; gives instant access to the S&P 500, an index of the 500 largest domestic stocks covering all industry sectors. This ETF was the first ETF, introduced in 1993, and is referred to as the “grandfather” of funds.

• PowerShares QQQ (QQQQ): up 34.8% year-to-date; viewed as a large-cap technology benchamark, this ETF tracks the Nasdaq 100 is a sub-set of the Composite, consisting of the 100 largest non-financial stocks in the index. Exposure to real estate, banks and insurance companies is not available in this fund.

• Diamonds Trust Series 1 (DIA): up 7.6% year-to-date; a 30-stock index that tracks Dow Jones Industrial Average, an index of the largest U.S. blue chip stocks. DIA excludes some key sectors like transportation and utilities. Despite criticisms of the Dow (it’s too narrow, it excludes certain key sectors), it does give access to mega-caps.

• iShares Russell 2000 Index (IWM): up 17% year-to-date; the Russell 2000 is an index of the 2,000 smallest companies ranked by U.S. market value. Small-caps often lead the way in a recovery, too. IWM can be a good way to hold hundreds of these small companies in one fund.

• iShares MSCI EAFE Index (EFA): up 15.2% year-to-date; An international fund based upon the Europe, Australasia and Far East Index published by Morgan Stanley Capital International. It includes Western Europe, Australia, Japan — the countries with modern stock markets and banking systems. The countries in the index can change as new ones are promoted to developed status.

• iShares MSCI Emerging Markets Index (EEM): up 45.7% year-to-date; markets like Brazil, Russia, India and China are represnted in this fund, along with markets that have recently made ties with the rest of the world. It can be challenging to buy stocks in emerging markets. This ETF, like so many others, simplifies the whole process.

If these or any other ETFs are appealing to you and right for your portfolio, watch the trend lines to spot any opportunities to get in. Be sure to have a sell point before you buy, too.

For more stories about ETFs, visit our ETF 101 category.

For full disclosure, Tom Lydon’s clients own shares of EEM, QQQQ and SPY.

ETF investing has become a popular way of getting into the market with less risk than a single stock, especially when times are still uncertain. Fear not – there are ways for skeptics to invest with a “recession-proof,” or defensive, strategy by looking at certain industries.

The Motley Fool suggests that a global approach can be a wise approach, since two-thirds of the global market cap resides outside the United States. Foreign companies and markets are still affected by the U.S. economy, however, the diversification a global investment brings can buffer the losses.

• iShares MSCI EAFE (EFA): up 15.9% year-to-date

EFA has more than 2,000 holdings, and companies span the globe, ensuring maximum diversification.

Another place investors may turn to for a defensive approach is dividend-paying stocks. The following fund offers about 100 dividend-paying companies. Some are in defensive industries, such as consumer staples, pharmaceuticals and utilities, although some are also in the beleaguered financial sector.

• iShares Dow Jones Select Dividend Index (DVY): down 2.9% year-to-date; yields 5.5%

Consumer staples can also be an option. While consumers might delay buying a new television or upgrading that clunky, slow computer, few consumers would put off buying toothpaste, toilet paper and certain basic foods. Consumer staples ETFs can be an appealing option for investors who want to capitalize on this notion.

• Consumer Staples Select Sector SPDR (XLP): up 2.7% year-to-date

Remember that having a strategy, no matter the market condition, is necessary. We follow the 200-day moving average. By watching market trends and following through with your strategy in place, losses will be kept to a minimum and emotions will be left out of the equation.

For more stories about dividend and global ETFs, visit our dividend and global ETF categories.

It’s long been known that two-thirds of the world’s market cap lies outside the United States. This means that investors who choose to ignore the rest of the world in favor of U.S. companies might be cutting off a potentially valuable lifeline to their portfolios.

Gary Motyl, chief investment officer of the Templeton Global Equity Group, is among those who remain positive on the chance of a global recovery and a rebound in stocks globally. He told Neil Martin for Barron’s about why he is optimistic on global stocks.

• The numerous stimulus packages introduced by many governments are starting to have an impact upon the economy.
• Historically, valuations remain low, yielding opportunity for the long term, specifically in emerging markets, like Brazil, Russia, China and India (the BRICs)
• Popular sectors include industrials, commodities, technology and semiconductors.  Telecommunications look the most attractive.
• Another point we’ll add is that so far, decoupling appears to be active: the S&P 500 is up 2.7% year-to-date; iShares MSCI Emerging Markets (EEM) is up 30.4%

• SPDR S&P World ex-US (GWL): up 6.1% year-to-date

• iShares MSCI EAFE Index Fund (EFA): up 5.4% year-to-date

Watch the trend lines in order to spot the best opportunities for yourself.

For more stories on global ETFs, visit our global ETF category.

With well over 700 ETFs being offered ranging from going short on gold to gaining exposure to Malaysia, some investors are overwhelmed by the smorgasbord of choices.  When it comes to narrowing it down to international ETFs, the list still remains long.  According to Simon Maierhofer of ETF Guide, there are 13 broad international equity ETFs, 26 regional ETFs, 42 country-specific equity ETFs, 32 international equity sector ETFs and 16 size-specific international equity ETFs.  This could confuse anyone.

When picking an international ETF one thing to keep in mind is diversification.  Emerging markets are known to be more volatile than the markets of developed nations, therefore one doesn’t want to be overly exposed to a specific region or country, unless, of course, that is your strategy.

When focusing on broad international equity ETFs, the vast majority play favorites to Japan and the United Kingdom.  Case in point: the popular iShares MSCI EAFE Index ETF (EFA), which is down nearly 6.6% for the year, allocates 24.1% of its assets to Japan, 19.9% to the United Kingdom and holds 838 securities; 44% of its assets are allocated to two countries, talk about a lack of diversification.

On the flip side, the Vanguard FTSE All World-Ex US ETF (VEU), down for the year and allocates 17.5% of its assets to Japan, 14.4% to the United Kingdom and holds a whopping 2,167 securities – a much more diverse option.  Exposure to Japan and the United Kingdom isn’t necessarily a bad thing; after all, they are both developed nations. Research indicates, however, that they move in tandem with the U.S. equity markets.

When it comes to regional ETFs, it is generally a good idea to steer clear from both Japan and the United Kingdom if looking long term.  An ETF to take a look at here is the iShares MSCI All Country Asia Ex-Japan ETF (AAXJ), which tracks many of the emerging markets in Asia without any exposure to Japan.  EPP is up 15.9% for the year and has crossed both of its 50- and 200-day moving averages.

In regard to country-specific ETFs, making a choice is up to the individual investor and the exposure he wants.  As of now, China is a hot market because of talks that the nation may be able to pull itself out of a downturn by the middle of the year.  An ETF to watch here is the iShares FTSE/Xinhua China 25 Index Fund (FXI), which is up 9.9% for the year, has crossed its 50- and 200-day moving averages.

At the risk of sounding like a broken record, when choosing ETFs, always look under the hood, utilize a strategy, stay diversified and keep up with current global economic news. Although these funds have crossed their trend lines, you always want to consider if they’re right for you and your goals, since everyone is different. If you want to track the performance of your ETFs, take a look at our ETF analyzer.

Kevin Grewal contributed to this article.

MSCI Barra is thinking of switching up its country lineup in its emerging markets Index, reports Sam Mamudi for The Wall Street Journal. Some fund managers think the changes could create more volatility, and more importantly, affect performance.

• iShares MSCI Emerging Markets Index (EEM): up 8.2% year-to-date; China is 15.4%, Brazil is 13.2%, South Korea is 12.7%, Taiwan is 11.1%, South Africa is 9.5%, India is 6.7%, Russian Federation is 5.4%, Mexico is 5.4%, Israel is 3.7%, Chile is 2.7%, Hong Kong is 2.5%, Czech Republic is 2.0%, Thailand is 1.7%, Indonesia is 1.5%, Philippines is 1.4%, Hungary is 1.3%, Turkey is 1.1%, Peru is 0.6%, Egypt is 0.6%, Malaysia is 0.4%, Colombia is 0.4%, United States is 0.3%, Argentina is 0.1%

In June, South Korea and Israel could be upgraded to the status of “developed markets.” These two countries would then be included into the MSCI EAFE Index, which includes Europe, Australasia and the Far East.

• iShares MSCI South Korea Index (EWY): up 13.2% year-to-date

• iShares MSCI Israel Cap Invest Mkt Index (EIS): up 14.7% year-to-date

• iShares MSCI EAFE Index (EFA): down 11.5% year-to-date

In the short term, it is thought that the South Korea’s withdrawal would negatively affect the performance of the Emerging Market Index and make the emerging markets more volatile because of the absence of its stable market.

It has been announced that Kuwait, Qatar and the United Arab Emirates could be inducted into the Emerging Market Index.

Max Chen contributed to this article.

Former mutual fund investors who took a hit this year are facing a deteriorating market and the managers who picked the so-called “winning” stocks. Stock pickers in seven of nine U.S.-stock categories have trailed the corresponding S&P indexes, investment researcher Morningstar Inc. revealed.

The exchange traded fund(ETF) is gaining appeal to many individual investors who crave transparency and lower costs. Jonathon Burton for The Wall Street Journal reports that switching over to ETFs isn’t exactly easy, and there are no equal translations, so there is research to be done.

About 700 U.S.- and international-stock ETFs jumble various sectors, strategies and styles. Then, mixing matters are “fundamental” ETFs, which blend elements of active management with conventional indexing methods. Financial advisors can help sort through the mess.

At ETF Trends, model portfolios include iShares MSCI EAFE Index Fund (EFA) and Claymore/BNY Mellon BRIC (EEB), among others.  Expenses are low, you know what you’re buying, and from a diversification standpoint you should benefit over time.

As the market share of ETFs continues to double about every three years, the actively managed mutual fund is finding itself on unsure footing.

In 2008, investors yanked $235 billion from non-money market mutual funds while adding $175 billion to ETFs, and the pace of the growth is likely to quicken. Robert Dubois for Seeking Alpha reports that asset levels at many mutual fund companies are standing at one-half to one-third of pre-crisis levels, leaving revenue streams dried up and the industry at a standstill.

As of the end of March, there was $489 billion in 839 ETFs and ETNs, according to the National Stock Exchange. Mutual funds still have a significant number of assets – $9 trillion, to be exact.

This trend away from mutual funds and toward ETFs have been occurring before July 2007, but recent market troubles have taken it to the next level. As investors are learning to appreciate the importance of both superior product and superior advice, many are now full aware that picking market tops and bottoms is not the way to go.

The industry transition to low-cost, transparent index investing via ETFs is being driven at a grassroots level, by a stream of determined individual retail and institutional investors and like-minded advisers. The other side of the coin will be demanded, as many investors want to know where there money is, and why.

Investors have a cornucopia of ETFs to choose from with 843 exchange-traded products currently available, writes Ron Rowland for Seeking Alpha. There are some oddballs that have trading sessions with zero volume and high bid/ask spreads. But there is also a select group known as the “ETF Billion Dollar Club” that has risen above the crowd in providing more than $1 billion per day in trades.

The average daily value traded (ADVT) is a good indicator for liquidity. It is the volume multiplied by price, and is sometimes referred to as $ Volume. Higher liquidity means there will most likely be someone out there willing to take the other side of a trade.

There are 17 members in this exclusive club as of February, 2009:

1. SPDR S&P 500 (SPY): ADVT of $30,767,683,584
2. PowerShares QQQ (QQQQ): $5,251,502,080
3. ProShares UltraShort Financials (SKF): $4,627,046,400
4. ProShares UltraShort S&P500 (SDS): $4,580,779,008
5. iShares Russell 2000 (IWM): $3,093,236,480
6. DIAMONDS Trust (DIA): $2,625,997,824
7. SPDR Gold Trust (GLD): $2,470,299,648
8. SPDR Select Sector Financial (XLF): $2,082,540,544
9. ProShares Ultra S&P 500 (SSO): $1,905,811,200
10. SPDR Select Sector Energy (XLE): $1,795,240,832
11. iShares MSCI Emerging Markets (EEM): $1,746,615,296
12. ProShares UltraShort Real Estate (SRS): $1,577,850,496
13. ProShares UltraShort QQQ (QID): $1,458,607,744
14. iShares Dow Jones U.S. Real Estate (IYR): $1,244,349,184
15. iShares MSCI EAFE (EFA): $1,222,589,568
16. Direxion Financial Bear 3x Shares (FAZ): $1,221,666,944
17. United States Oil Fund (USO): $1,034,414,528