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ETF Glows in China's Shadow

A Thailand ETF has outperformed a number of China focused ETFs.
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) -- As I wrote


, investors can develop great international exposure by using country-specific ETFs of nations such as Indonesia and Malaysia outside of the popular BRICs.

Of the BRICs, the country that gets to most attention is China, and today, I want to show investors one more option they have for international exposure that comes from just outside of China on the country's doorstep in Southeast Asia.

iShares MSCI Thailand Investable Market Index Fund

(THD) - Get iShares MSCI Thailand ETF Report

THD tracks 85 Thai companies, trades with ample volume, and carries a 0.65% expense ratio.

The fund's top holding is PTT Plc, Thailand's state-owned oil and natural gas company, which accounts for 11.1% of THD's net assets. Another 9.2% is allocated to the company's affiliate, PTT Exploration and Production Plc, which handles petroleum exploration operations.

Bangkok Bank is the second largest holding, and the financial sector is the best represented sector in THD, accounting for 36.4% of the fund. The energy sector is close behind, with 31.8% of THD's net assets. The next largest sector, materials, accounts for only 8% of the fund.

Year to date, THD has increased 2.4% and has beaten a variety of China-focused ETFs in the process.

iShares FTSE/Xinhua China 25 Index

(FXI) - Get iShares China Large-Cap ETF Report

is down 5% year to date;

Claymore/AlphaShares China Real Estate

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TheStreet Recommends

(TAO) - Get Invesco China Real Estate ETF Report

is off 4.1%;

Claymore/AlphaShares China All Cap


has fallen 3.7%; and

PowerShares Golden Dragon Halter USX China

(PGJ) - Get Invesco Golden Dragon China ETF Report

has slid1.5%. Meanwhile,

Claymore/AlphaShares China Small Cap

(HAO) - Get Invesco China Small Cap ETF Report

is up only 0.2%.

Thailand also gained attention amongst investors last week when THD made my coveted weekly list of ETF winners after its five-day gain of 3.9%.

At the close of last week, there was some concern that a Supreme Court ruling to take away a large portion of the corrupt former prime minister's assets would hurt markets there, but THD has performed well this week and the political scene appears stable for now. UBS also believes that with the ruling out of the way and no immediate negative public reaction, markets will be given further room to run, according to



Thailand features the cheapest equity market in Asia right now and foreign buyers looking for value helped push THD upwards last week. This trend seems set to continue as Tuesday saw enormous inflows to the country from foreign investors.

The trend may even pick up pace since State Street Global Advisors this week mentioned Thailand as a promising emerging market and cited the cheap valuation of their equity market as part of their reasoning.

In addition inflation in Thailand is under control, falling between January and February and taking pressure off of the government to raise interest rates at the March 10 meeting of policy-makers.

This is important because the government wants the ability to gradually raise interest rates. Although the economy exited the recession last quarter, political unrest could destabilize the economic situation.

Investors should be wary that political protests in Thailand may occur going forward, but they should also keep in mind that troubles in the country have been ongoing for several years and are to an extent factored in to current market values.

The Wrap-Up

THD represents another great opportunity in addition to the Malaysia and Indonesia ETFs I previously mentioned for investors to diversify within the outperforming Southeast Asian region.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion does not own any of the funds 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.