Invest in the Middle East -- but Not With Oil

Just like with PMNA, the financial sector is the largest for both funds, 47% for GULF and 60% for MES, and energy has almost no weighting. That might seem like a surprise, but the oil companies in this part of the world are run by the respective governments.

Telecom is featured prominently in GULF, with a 24% weight, but only 3.6% in MES. Both funds allocate about 7% to materials, GULF has 5% in real estate compared with 10% for MES, MES found 7% for technology compared with none for GULF, and neither fund really captures consumer stocks in any meaningful way.

One interesting item about the stock selection is that while MES has no weighting in Morocco, GULF's largest holding is Maroc Telecom, the big phone company from Morocco that composes 9% of the fund.

In addition to composition differences, there are also big differences in the back tests. GULF's back-test had one-year and three-year returns of 37.79% and 26.71% annualized, compared with 28.81% and 10.17% annualized for MES.

It isn't clear if the GULF back test is superior because of the large weight to Maroc Telecom, the allocation to Egypt, the reinvestment of dividends or something else. To the extent that dividends helped, one thing to keep in mind (using the other WisdomTree funds as examples) is that GULF's yield might be noticeably less than the 5.31% noted on the WisdomTree site.

If a lot of assets pour into the fund, the actual payout should be expected to be less than the index until growth of the fund moderates.