NEW YORK (TheStreet) -- Broad-based indexing, an investment strategy designed to reflect the movement of the entire stock market, yielded poor results in the past decade.

The

S&P 500 Index

of the biggest U.S. stocks dropped 24%, Germany's benchmark fell 17%, the U.K. slumped 23% and Japan cratered 49%. Well-respected fund manager Robert Arnott made the case in a recent report for another subpar decade. As bad as the past 10 years were, some countries' indices outperformed, a trend that may continue for the next decade.

In contrast to the developed nations' returns mentioned above, China rose 136%, Brazil jumped 301% and Egypt soared 327%. Exchange traded funds that focus on China and Brazil have been available for years, though that's not the case with Egypt. Until now. The

Market Vectors Egypt Portfolio

(EGPT) - Get VanEck Vectors Egypt Index ETF Report

joins ETFs that cover Turkey, Chile and Poland.

Among emerging economies, Egypt is unique. The Middle Eastern country has a large population (at 78 million, it's the most populous Arab nation), a relatively modern economy, a developing middle class, and subsiding extremism and terrorism (the most recent big news being a riot-inducing bread crisis).

The economic statistics are a mix of good numbers -- gross domestic product growth of 7.2% in 2008, 4.7% in 2009 and a forecast of 4.5% this year, and a debt-to-GDP of 79% (big but getting smaller) -- and bad numbers like inflation in the low teens and a sizeable budget deficit at 8.4%.

While it is important to have a sense of the economic fundamentals of a country before buying it, the history of trading for the

CASE 30 Index

, not the benchmark for the ETF, is one of wild swings. It was up 56% in 2005, followed by a 39% decline in just four months in early 2006 before going on a two-year 230% run. And while Egypt did peak long after the S&P 500, a positive for diversification, its peak-to-trough decline was 71% from which it has since doubled but is still well below its 2008 high. There is little reason to think volatility will die down anytime soon.

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As for asset allocation, the ETF is heaviest by far in financial stocks, at 42%, followed by telecommunications, 17%, industrials, 15%, and materials, 14%. The largest holding in the fund is

Commercial International Bank

, with an 8.8% position. It makes sense for anyone interested in the ETF to learn a little about the bank. Earnings increased by 25% in 2009, it yields 1.3% but, recently, New York-based private-equity firm Ripplewood sold its 4.7% stake. Although no reason was cited for the sale, it may have been as simple as the price has about doubled in the past 12 months.

Eight of the ETF's 29 holdings have weightings greater than 5%, so a misstep by any of those could be a drag on the fund.

Egypt poses challenges for investors. Volatility can be meaningful and, right now, the Egyptian market is between its high and low. In addition, ETF makes big bets, out of necessity no doubt, which leads me to conclude that it isn't suitable for everyone. Despite all of that, I am convinced that the country will become an increasingly important investment destination during the new decade. Investors who are smart may realize that a little exposure can go a long way.

One last note is that both

GlobalX

and

iShares

have each filed for Egypt ETFs. It would be important to compare their composition methods.

At the time of publication, Roger Nusbaum had no positions in the securities mentioned.

Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback;

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