TheStreet.com Ratings: Five ETFs to Own

Third on the list is iShares MSCI Australia (EWA Quote), with a return of 10.4% for the first quarter. Two-thirds of the fund is invested in banking and real estate with the balance mostly in metals and mining stocks.

Fourth on the list is iShares MSCI Austria (EWO Quote), with a return of 5.3% for the first quarter. The fund invests in the MSCI Austria stocks on the Vienna Stock Exchange, Wiener Borse AG, with significant concentrations in banking (47%) and metals/mining (46%).

The fifth ETF pick is iShares MSCI Spain (EWP Quote), with a return of 5.0% for the first quarter. This ETF tracks the MSCI Spain index that consists primarily of stocks that are traded on the Madrid Stock Exchange. Like most country ETFs, the lead sector is financial. Three bank stocks -- Banco Santander, Banco Bilbao and Banco Popular Espanol -- represent 36% of the portfolio.

Among the most significant contributors to recent performance are Endesa, an electric utility, and Altadis, a tobacco company, both subjects of European takeover consolidation attempts.

The Spanish ETF is also an indirect play on Latin American growth, because Spanish banks have significant presence in the Americas. For 2007, the IMF forecasts that Latin America will register another good year, with growth of 4.9% and an economic acceleration in Brazil.

These have been the winners in the first quarter, and it appears the momentum may continue into the second quarter. That's the good news.

But computer models can occasionally be wrong. Not all risks can be modeled. For example, the IMF noted that their forecasts could be affected by external risks such as volatile energy prices, further financial market tightening and risks from global imbalances.

Use this and TheStreet.com Ratings as a guide for your own homework and discussions with others about where the action in country funds may be in the near term.

Below is a list of the correlation coefficients for our top ETFs compared to the S&P 500 SPDR and the MSCI EAFE Index ETFs, which we use as proxies for the U.S. and International markets. Correlation measures how two securities move in relation to each other. A lower correlation coefficient normally translates into higher diversification of assets. The closer the valuation is to 1, the more similar the investments.

Top-Rated A+ Country Funds
ETF (Ticker)	Correlation with S&P 500	Correlation with iShares MSCI EAFE Index
Malaysia (EWM)	0.644	0.649
Singapore (EWS)	0.711	0.773
Australia (EWA)	0.584	0.738
Austria (EWO)	0.645	0.772
Spain (EWP)	0.821	0.907
U.S. SP500 (SPY)	1	0.843
Europe, Australia, and Far East (EFA)	0.843	1
Source: Bloomberg daily price correlations 4/11/06-4/12/06