Two Sector ETFs From iShares

The world's largest ETF provider, iShares, is looking to beef up its family of emerging market exchange-traded funds with the registration of two new ETFs focused on sectors.

Currently, most emerging markets ETFs provide investors broad exposure to these nations.

The iShares MSCI Emerging Markets Financial Sector Index Fund will track an index consisting of 166 firms across 22 emerging nations. Its likely biggest competitor is a similar fund, Emerging Global Advisors' EGS Dow Jones Emerging Markets Financial Titans Index Fund (EFN - commentary - Trade Now), which tracks a basket of 26 firms across eight nations.

EFN launched in mid September making it relatively new to the ETF arena. In the past month, the fund has gained a little more than 5%, while a lack of interest from investors has hindered the fund's attractiveness. Currently, EFN's average trading volume is just shy of 4,300.

iShares' second registered fund, the iShares MSCI Emerging Markets Materials Sector Index Fund, will track over 100 firms hailing from 18 countries. These firms will specialize in, among other things, forest products, chemicals, metals and mining, and construction.

Once again, this new instrument will face competition when it hits the trading floor. The EGS Dow Jones Emerging Markets Basic Materials Titans Index Fund (EBM - commentary - Trade Now) tracks an index made up of 30 firms across 10 different nations. At this time, the EBM has not officially launched.

Other funds designed to provide investors with sector-specific exposure to emerging market include the Dow Jones Emerging Markets Metals & Mining Titans Index (EMT - commentary - Trade Now) and Dow Jones Emerging Markets Energy Titans Index Fund (EEO - commentary - Trade Now).

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At the time of publication, Dion had no positions in stocks mentioned.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.