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In the quest to seek out the newest emerging markets, investors have been snapping up shares of exchange traded funds that focus on individual countries like Russia, Vietnam, Thailand, Turkey and South Korea.

Rather than sticking with traditional "BRIC" ETFs, which combine Brazil, Russia, India and China, risk-tolerant investors are looking for new ETFs to participate in emerging markets.

In the first installment of

Sick of BRIC?

I discussed

Market Vectors Russia

(RSX) - Get VanEck Vectors Russia ETF Report


Market Vectors Vietnam

(VNM) - Get VanEck Vectors Vietnam ETF Report


Today's offering focuses on

iShares MSCI Thailand Index Fund

(THD) - Get iShares MSCI Thailand ETF Report


iShares MSCI Turkey Index Fund

(TUR) - Get iShares MSCI Turkey ETF Report


iShares MSCI South Korea Index Fund

(EWY) - Get iShares MSCI South Korea ETF Report


Emerging markets funds can be volatile, so a small asset allocation to these funds is appropriate for most buy-and-hold investors.

TheStreet Recommends

iShares MSCI Thailand Index Fund

THD is up more than 70% year to date on the strength of its energy and financial-heavy portfolio. The capitalization-weighted portfolio tracks the Thai "slice" of the MSCI Index with the MSCI Thailand Investable Market Index.

As is the case with many global economies, increased spending on the part of Thailand's central government has helped to pull this country out of the economic downturn. While Thailand's economy contracted nearly 5% year over year during the second quarter, there was an increase in overall growth of 2.3% from the first to second quarter.

According to

The Wall Street Journal

, recently released government data suggest that the worst of the financial downturn could be past for Thailand. While risk factors like the swine flu and political uncertainty still hover over this emerging economy, government estimates suggest an expansion of as much as 3% in 2010.

Commodities and financials, the top two sectors represented in the THD portfolio, continue to improve across the globe. As trade and tourism improve, and government spending continues, THD still may have a ways to run.

iShares MSCI Turkey Index Fund

A recovering financial sector has helped to propel TUR up 83% year to date. This highly concentrated fund tracks the MSCI Turkey Investable Market Index, made up of the largest firms in the Turkish equity market.

While Turkey's financial markets still face political uncertainty, positive democratic reforms have helped to promote investment opportunities. Turkey's domestic demand has been growing, aided by an influx of new manufacturing orders. Increased production has also helped to boost employment.

TUR is an effective way to gain exposure to a basket of Turkish firms, but potential investors should be mindful of concentration in this ETF's top components. The largest holding in this ETF, Turkiye Garanti Bankasi, makes up nearly 15% of the fund. TUR also has a heavy allocation in the financial sector, which makes up more than 50% of this fund.

TUR is a good addition to an emerging-market portfolio, but should be used along with other funds to provide diversity and stem some of the fund's potential volatility.

iShares MSCI South Korea Index Fund

South Korea's currency has dropped significantly against its two main competitors, making the emerging nation both inexpensive and more competitive for exports.

Shares of EWY, which tracks the MSCI Korea Index, are up nearly 60% year to date. Like TUR, EWY is top-heavy in both equity and sector allocation. Top EWY component


makes up 19.11% of this fund, while the fund's top sectors, information technology, financials and industrials have 29.91%, 17.01% and 15.20% allocations, respectively.

Korea's strong IT sector has been fueled by demand from China's consumers. As trade improves, look for South Korea to grow as a global competitor in the IT sector, offering high-quality products at competitive prices.

Funds like EWY, TUR and THD offer unique opportunities in emerging markets. While all emerging economies offer a high risk/reward potential, these country-specific funds help to target areas that have a particularly strong sector.THD and TUR focus on energy and financials; EWY focuses on information technology.

Potential investors must be aware of the increased volatility and concentration that comes with investing in a single-country emerging-market fund. Buy-and-hold investors should keep their emerging market allocation small and mix up their holdings between multiple single-country funds.

At the time of publication, Dion was long THD and TUR.

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.