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ETF Digest

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There is currently an expanding list of 35 ETFs oriented to the Asia-Pacific market, whether in single country funds or with regional issues. The following analysis features a fair representation of regional ETFs available. We believe from these, investors may choose an appropriate ETF to satisfy the best index-based offerings individuals and financial advisors may utilize.

It's important investors understand index weightings here more than perhaps in other sectors. Some are heavily weighted toward a single country like Australia or Japan. We prefer a better blend generally despite perhaps better trading and trending characteristics. For example, where an ETF is weighted heavily toward just one or two countries it might be better to deal with a single country fund rather than an undiversified regional issue. These might include EWA (Australia) or EWJ (Japan) when dealing with popular EPP or VPL.

ETFs are based on indices tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones and so forth. Also included are some so-called "enhanced" indices that attempt to achieve better performance through more active management of the index.

Where competitive issues exist and/or repetitive issues available at a fee cost saving we mention those as other choices. New issues are coming to market consistently (especially globally) and sometimes these issues will need to become more seasoned before they may be included at least in our listings.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12-month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach.

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receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from

ProShares

and

Direxion

and where available these are noted.

#10: First Trust ISE Chindia ETF

(FNI)

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FNI follows the ISE Chindia Index which consists of 50 ADRs, ADSs and/or stocks of companies that are listed in either China or India. The fund was launched in May 2007. The expense ratio is .60%. AUM equal $98 million and average daily trading volume is 28K shares. As of mid-March 2012 the annual dividend yield was 1.33% and YTD return was 23.91%. The one year return was -5.84%.

Note: Marrying the two markets has seductive qualities but they're two different economies and political structures.

Data as of First Quarter 2012

FNI Top Ten Holdings

    ICICI Bank Ltd ADR (IBN): 8.10%

    PetroChina Co Ltd ADR (PTR): 7.40%

    HDFC Bank Ltd ADR (HDB): 6.96%

    China Mobile Ltd. ADR (CHL): 6.68%

    Infosys Ltd ADR (INFY): 6.64%

    Baidu, Inc. ADR (BIDU): 6.19%

    Tata Motors, Ltd. ADR (TTM): 4.83%

    Melco Crown Entertainment Ltd ADR (MPEL): 4.39%

    Sterlite Industries (India), Ltd. ADR (SLT): 4.15%

    SINA Corporation (SINA): 4.11%

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    #9: PowerShares BLDRS Asia 50 ADR ETF

    (ADRA)

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    VPL follows the Bank of New York Mellon Asia 50 ADR Index covering 50 different Asian market-based depository receipts. The fund was launched in November 2002. The expense ratio is .23%. AUM equal $33 million and average daily trading volume is 4K shares. As of mid-March 2012 the annual dividend yield was 3.88% and YTD return was 16.45%. The one year return was 1.14%.

    Note: The fund has lost 50% of AUM since the peak in the summer of 2011 and daily volume is quite low. Be cautious with this ETF for these reasons. At the same time you'll note a low expense ratio, decent dividend at these levels and holdings dominated by large companies.

    Data as of First Quarter 2012

    ADRA Top Ten Holdings & Weightings

      BHP Billiton Ltd ADR (BHP): 10.64%

      Toyota Motor Corp ADR (TM): 9.22%

      Taiwan Semiconductor Manufacturing ADR (TSM): 5.72%

      Westpac Banking Corp ADR (WBK): 5.68%

      Mitsubishi UFJ Financial Group, Inc. ADR (MTU): 5.42%

      Honda Motor Co Ltd ADR (HMC): 5.12%

      China Mobile Ltd. ADR (CHL): 3.81%

      Sumitomo Mitsui Financial Group Inc ADR (SMFG): 3.73%

      Canon, Inc. ADR (CAJ): 3.58%

      Mizuho Financial Group Inc (MFG): 3.02%

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      #8: Vanguard Pacific ETF

      (VPL)

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      VPL tracks the MSCI Pacific Index which includes the region ranging from Japan (58%) and Australia (26%) with the rest divided between markets like Hong Kong, New Zealand and Singapore. The fund was launched in March 2005. The expense ratio is .14%. AUM equal $1.6 billion and average daily trading volume is 273K shares. As of mid-March 2012 the annual dividend yield was 3.00% and YTD return was 11.52%. The one year return was 3.38%.

      Nearly 80% of weightings in Japan and Australia which isn't very diversified in our opinion.

      Data as of First Quarter 2012

      VPL Top Ten Holdings & Weightings

        BHP Billiton Limited (BHPLF): 3.41%

        Toyota Motor Corporation (7203): 2.74%

        Commonwealth Bank of Australia (CBA): 2.35%

        Westpac Banking Corp (WBC): 1.86%

        Australia & New Zealand Banking Grp Ltd. (ANEWF): 1.65%

        Mitsubishi UFJ Financial Group, Inc. (8306): 1.62%

        National Australia Bank Limited (NAB): 1.58%

        Canon, Inc. (CAJFF): 1.50%

        Honda Motor Company (7267): 1.49%

        Sumitomo Mitsui Financial Group, Inc. (SMFNF): 1.12%

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        #7: iShares Pacific ex-Japan ETF

        (EPP)

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        EPP follows the MSCI Pacific ex-Japan Index which follows a blend of Australia, Hong Kong, New Zealand and Singapore equity markets with a heavy weighting toward Australia (65%). The fund was launched in October 2005. The expense ratio is .50%.

        AUM (Assets under Management) equal $3.4 billion and average daily trading volume is over 632K shares. As of mid-March 2012 the annual dividend yield was 3.92% and YTD return was 13.46%. The one year return was 5.30%.

        While bigger may be better sometimes I just think you could buy EWA (Australia) and marry it with another regional issue. Further, and perhaps more than others, the level of commodity prices can affect positively or negatively with high Australia exposure.

        For investors interested in hedging or speculating ProShares features leveraged long and short ETFs linked to this index.

        Data as of First Quarter 2012

        EPP Top Ten Holdings & Weightings

          BHP Billiton Ltd (BHPLF): 8.80%

          Commonwealth Bank of Australia (CBA): 5.85%

          Westpac Banking Corp (WBC): 4.81%

          Australia and New Zealand Banking Group Limited (ANEWF): 4.38%

          National Australia Bank Limited (NAB): 3.95%

          Woolworths Limited (WOW): 2.34%

          AIA Group Ltd. (01299): 2.24%

          Rio Tinto Ltd (RIO): 2.23%

          Wesfarmers Ltd (WES): 2.22%

          Newcrest Mining Limited (NM): 1.94%

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          #6: Global X ASEAN 40 ETF

          (ASEA)

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          ASEA follows the FTSE/ASEAN 40 Index which measures the 40 largest companies in five ASEAN regions: Indonesia, Philippines, Singapore, Malaysia and Thailand. The fund was launched in February 2011. The expense ratio is .65%. AUM equal $22 million and average daily trading volume is near 8K shares. As of mid-March 2012 the annual dividend yield was 2.31% and YTD return was 12.18%. The one year return was 11.08%.

          Another note: this is a relatively new ETF and even with market turmoil AUM has grown. It's included here because the structure is important, unique and covers an important sector overall. Nevertheless, trading is light and as with others like this you need to be cautious with trading orders sticking to limit versus market orders.

          Data as of First Quarter 2012

          ASEA Top Ten Holdings & Weightings

            Astra International Tbk (ASJ): 6.43%

            Singapore Telecommunications Limited (Z74): 5.48%

            DBS Group Holdings Ltd (D05): 5.43%

            Oversea-Chinese Banking Corp Ltd (O39): 5.01%

            United Overseas Bank Ltd. (U11): 4.60%

            Malayan Banking Bhd Maybank: 4.45%

            Public Bank Berhad: 4.37%

            Sime Darby Berhad (Malaysia): 3.96%

            CIMB Group Holdings Berhad: 3.62%

            Keppel Corp Ltd (KPELF): 3.20%

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            #5: PowerShares Asia Pacific ex-Japan ETF

            (PAF)

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            PAF follows the FTSE RAFI Developed Asia Pacific ex-Japan Index which is designed to track the largest equities in the region selected on four fundamental measures: book value, income, sales and dividends. The fund was launched in June 2006. The expense ratio is .80%. AUM equal $61 million and average daily trading volume is 7.6K shares. As of mid-March 2012 the annual dividend yield was 2.84% and YTD return was 14.42%. The one year return was 4.31%.

            As an additional note, I wouldn't find it too off-putting given lower AUM data. $25 million is the minimum for a successful ETF. As for liquidity issues you should be precise in your orders placing limit orders to buy or sell.

            Data as of First Quarter 2012

            PAF Top Ten Holdings & Weightings

              Samsung Electronics Co Ltd (SSNLF): 7.10%

              Commonwealth Bank of Australia (CBA): 4.19%

              BHP Billiton Ltd (BHPLF): 4.03%

              National Australia Bank Limited (NAB): 4.01%

              Westpac Banking Corp (WBC): 3.55%

              Australia and New Zealand Banking Group Limited (ANEWF): 3.24%

              SK Holdings Co Ltd: 2.44%

              Hyundai Motor Co Ltd (HYUO): 2.43%

              POSCO: 2.36%

              Woolworths Limited (WOW): 1.73%

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              #4: WisdomTree Asia-Pacific ex-Japan

              (AXJL)

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              AXJL follows the WisdomTree Asia Pacific ex-Japan Index which is a fundamentally weighted index following the top 300 dividend paying companies in the region and ranked by market capitalization. The fund was launched in June 2006. The expense ratio is .48%. AUM equal $70 million and average daily trading volume is less than 10K shares. As of mid-March 2012 the annual dividend yield was 3.88% and YTD return was 12.85%. The one year return was 9.61%.

              Data as of First Quarter 2012

              AXJL Top Ten Holdings & Weightings

                China Mobile Ltd. (00941): 7.50%

                China Construction Bank Corp (00939): 4.76%

                Commonwealth Bank of Australia (CBA): 3.32%

                Westpac Banking Corp (WBC): 3.10%

                Telstra Corp Ltd (TTRAF): 2.66%

                Australia and New Zealand Banking Group Limited (ANEWF): 2.59%

                WisdomTree India Earnings: 2.54%

                Taiwan Semiconductor Manufacturing (2330): 2.28%

                National Australia Bank Limited (NAB): 2.21%

                CNOOC, Ltd. (00883): 2.08%

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                #3: iShares Asia 50 ETF

                (AIA)

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                AIA follows the S&P Asia 50 Index which the 50 leading companies from Hong Kong, South Korea, Singapore and Taiwan. The fund was launched in November 2007. The expense ratio is .50%. AUM equal $170 million and average daily trading volume is 38K shares.

                As of mid-March 2012 the annual dividend yield was 2.56% and YTD return was 15.94%. The one year return was 5%.

                Data as of First Quarter 2012

                AIA Top Ten Holdings & Weightings

                  Samsung Electronics Co., Ltd. (SSNLF): 13.85%

                  Taiwan Semiconductor Manufacturing (2330): 6.21%

                  China Construction Bank Corp (00939): 5.28%

                  China Mobile Ltd. (00941): 4.79%

                  Industrial And Commercial Bank Of China Ltd. (01398): 3.88%

                  CNOOC, Ltd. (00883): 3.16%

                  Hyundai Motor Co Ltd (HYUO): 2.94%

                  Hon Hai Precision Ind. Co., Ltd. (2317): 2.82%

                  PetroChina Co Ltd (00857): 2.78%

                  AIA Group Ltd. (01299): 2.65%

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                  #2: SPDR Emerging Asia Pacific ETF

                  (GMF)

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                  GMF follows the S&P Asia Pacific Emerging BMI Index which includes publicly traded companies throughout emerging Asian Pacific markets. The fund was launched in March 2007. The expense ratio is .59%. AUM equal $503 million and average daily trading volume is 73K shares. As of mid-March 2012 the annual dividend yield was 3.42% and YTD return was 15.00%. The one year return was -.49%.

                  Data as of First Quarter 2012

                  GMF Top Ten Holdings & Weightings

                    Taiwan Semiconductor Manufacturing ADR (TSM): 3.60%

                    China Construction Bank Corp (00939): 2.87%

                    China Mobile Ltd. (00941): 2.62%

                    Industrial And Commercial Bank Of China Ltd. (01398): 1.95%

                    PetroChina Co Ltd (00857): 1.89%

                    Baidu, Inc. ADR (BIDU): 1.88%

                    CNOOC, Ltd. (00883): 1.73%

                    Hon Hai Precision Ind. Co., Ltd. (2317): 1.64%

                    Infosys Ltd ADR (INFY): 1.52%

                    Reliance Industries Ltd. ADR (RIGD): 1.50%

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                    #1: iShares Asia ex-Japan ETF

                    (AAXJ)

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                    AAXJ follows the MSCI All Country Asia ex-Japan Index which includes the performance of 11 developed and emerging Asian equity markets. The fund was launched in August 2008. The expense ratio is .74%. AAXJ trades commission free at TD Ameritrade. AUM equal nearly $2.5 billion and average daily trading volume is 515K shares.

                    As of mid-March 2012 the annual dividend yield was 1.82% and YTD return was 16.00%. The one year return was -.19%.

                    Data as of First Quarter 2012

                    AAXJ Top Ten Holdings & Weightings

                      Samsung Electronics Co Ltd (SSNLF): 4.35%

                      Taiwan Semiconductor Manufacturing (2330): 2.52%

                      China Mobile Ltd. (00941): 2.39%

                      China Construction Bank Corp (00939): 1.84%

                      Industrial And Commercial Bank Of China Ltd. (01398): 1.64%

                      CNOOC, Ltd. (00883): 1.50%

                      PetroChina Co Ltd (00857): 1.20%

                      AIA Group Ltd. (01299): 1.15%

                      Hyundai Motor Co Ltd (HYUO): 1.10%

                      Hon Hai Precision Ind. Co., Ltd. (2317): 1.08%

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                      We rank the top 10 ETF by our proprietary stars system as outlined below. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to

                      support@ETFDigest.com

                      and we'll attempt to satisfy your interest.

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                      Strong established linked index

                      Excellent consistent performance and index tracking

                      Low fee structure

                      Strong portfolio suitability

                      Excellent liquidity

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                      Established linked index even if "enhanced"

                      Good performance or more volatile if "enhanced" index

                      Average to higher fee structure

                      Good portfolio suitability or more active management if "enhanced" index

                      Decent liquidity

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                      Enhanced or seasoned index

                      Less consistent performance and more volatile

                      Fees higher than average

                      Portfolio suitability would need more active trading

                      Average to below average liquidity

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                      Index is new

                      Issue is new and needs seasoning

                      Fees are high

                      Portfolio suitability also needs seasoning

                      Liquidity below average

                      For the last decade the Asia-Pacific region has offered the best prospects for economic growth and potential investment returns. These markets have been more volatile historically but have seen this become reduced in the past few years as markets have become more developed than previously. But in the fall of 2011 the higher volatility returned causing sharper losses in this sector than more established markets. Nevertheless, with better economic growth inflation fears will rise and authorities have been trying to contain these by increasing interest rates and/or raising bank reserves. Now economies may be moving toward either reduced economic growth. Nevertheless global markets are highly correlated making trends overall similar despite greater volatility.

                      It's also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs. New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

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                      The ETF Digest is long AAXJ in the featured ETFs.

                      (Source for data is from ETF sponsors and various ETF data providers)

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