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Russia is beginning to struggle with an aging population while the MENA (Middle East & Africa) sectors have a more youthful and developing consumer market. Demographics play a key role, and in that regard, selections in this diverse region are extremely varied.

Some parts of this region would be in the Pioneer category, meaning they're truly in their infancy for investors. Others are quite mature and have existed for quite some time with high AUM (assets under management) investor interest and acceptance.

Russian and South African markets are rich in natural resources making for volatility along with the price action in commodity markets. South Africa has both a high level of natural resources and excellent demographics, meaning a rising consumer base.

During 2011, the MENA was swept up in the Arab Spring as long-ruling dictators were thrown out and new regimes took their place. In the first quarter of 2012, this trend is continuing with the current battleground in Syria. It is uncertain how these developments will affect what markets exist in affected countries, whether in Egypt, the Gulf States and so forth. 

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 only if enough data exist to make this useful. For us, many longer-term indices (not displayed) have enough data with which to make good decisions. 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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#10: Van Eck Russian Small-Cap ETF

(RSXJ)

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RSXJ follows the Market Vectors Russia Small-Cap Index which is a rules-based, modified market capitalization-weighted, float adjusted index comprised of publicly traded companies that are domiciled and primarily listed in Russia or that generate the majority of their revenues in Russia. The fund was launched in April 2011. The expense ratio is .67%. AUM equal $5 million and average daily trading volume is around 4K shares.  As of late March 2012 the annual dividend yield was .40% and YTD return 14.41%. The one year return was not applicable.

Van Eck is a well-heeled firm but that wouldn't necessarily prevent any firm from closing a fund that becomes a poor business venture. If it happened at all they may just roll the fund's assets into RSX. This is just a note of caution based on the low AUM currently.

Data as of Late March 2012

RSXJ Top Ten Holdings & Weightings

    Transneft' AK OAO: 9.76%

    Alliance Oil Company Ltd. (AOIL SDB): 7.20%

    OJSC Pharmstandard GDR (PHST): 6.60%

    Gruppa Kompany PIK OAO GDR (PIK): 5.04%

    Globaltrans Investment PLC GDR (GLTR): 4.81%

    Petropavlovsk PLC (POG): 4.75%

    Aeroflot Russian Airlines JSC: 4.55%

    VSMPO-AVISMA Corp: 4.24%

    CTC Media, Inc. (CTCM): 3.89%

    Heritage Oil PLC (HOIL): 3.54%

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    #9: Van Eck Egypt ETF

    (EGPT)

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    EGPT follows the Market Vectors Egypt Index which consists of companies listed on an exchange in Egypt or that generate 50% of their revenues from the country. The fund was launched in February 2010. The expense ratio is .94%. AUM equal $36 million and average daily trading volume is 38K shares. (AUM in July 2011 after the revolution was $66 million and average daily trading volume is 65K shares. So it's still in decline from that aspect.)  As of late March 2012 the annual dividend yield was 1.77% and YTD return 15.65%. The one year return was -23.58%.

    EGPT was one of the first casualties of the "Arab Spring" and continues to suffer as the country's future remains uncertain.

    Data as of Late March 2012

    EGPT Top Ten Holdings & Weightings

      Orascom Construction Industries SAE GDR (ORSD): 8.39%

      Orascom Telecom Holding SAE GDR (OTLD): 7.58%

      Commercial International Bank Egypt SAE: 7.14%

      Telecom Egypt: 6.07%

      Egypt-Kuwait Hldg Co: 5.48%

      Talaat Mostafa Group (TMG): 5.37%

      National Societe Generale Bank: 5.16%

      TransGlobe Energy Corporation (TGA): 5.08%

      Efg-Hermes, Cairo: 4.85%

      Egyptian Company For Mobile Communications: 4.30%

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      #8: Wisdom Tree Gulf Dividend ETF

      (GULF)

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      The index is a fundamentally weighted index that measures the performance of companies in the Middle East region that pay regular cash dividends on shares of common stock and that meet specified requirements as of the index measurement date. Companies eligible for inclusion in the Index must be incorporated in and have their shares listed on a major stock exchange in Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Qatar or the United Arab Emirates.

      The fund was launched in July 2008. The expense ratio is .88%. AUM equal $14 million and average daily trading volume is 6K shares. As of late March 2012 the annual dividend yield was 5.26% and YTD return 5.88%. The one year return was -.84%.

      Data as of Late March 2012

      GULF Top Ten Holdings & Weightings

        Mobile Telecommunication Co: 12.61%

        Maroc Telecom (IAM): 10.00%

        Industries Of Qatar: 7.93%

        Qatar National Bank: 4.81%

        National Bank of Kuwait: 4.36%

        Oman Telecommunications Co: 4.34%

        Qatar Telecom: 4.32%

        First Gulf Bank: 3.92%

        Commercial Bank of Qatar: 3.65%

        National Bank of Abu Dhabi: 3.64%

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        #7: Van Eck Gulf States ETF

        (MES)

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        MES follows the Dow Jones GCC Titans 40 Index which consists of publicly traded companies belonging to the Gulf Cooperation Council. The fund was launched in July 2008. The expense ratio is .99%. AUM equal $14 million and average daily trading volume is 6K shares. As of late March 2012 the annual dividend yield was 1.77% and YTD return 15.65%. The one year return was -23.58%.

        Investors believing they're investing in oil would be mistaken since most of the constituents are financial companies which only benefit indirectly from oil wealth. Oil is controlled by the government or ruling monarchs.

        Data as of Late March 2012

        MES Top Ten Holdings & Weightings

          National Bank of Kuwait: 8.27%

          Qatar National Bank: 7.85%

          Kuwait Finance House: 7.84%

          Mobile Telecommunication Co: 7.63%

          Masraf Al-Rayan: 5.09%

          Emaar Properties: 4.39%

          National Bank of Abu Dhabi: 4.09%

          DP World Ltd (3DW): 3.99%

          Qatar Telecom: 3.71%

          Ahli United Bank BSC: 3.53%

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          #6: SPDR Middle East & Africa ETF

          (GAF)

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          GAF follows the S&P Mid-East and Africa BMI Index which is a market capitalization weighted index of investable universe of publicly traded companies in the region. The fund was launched in March 2007. The expense ratio is .59%. AUM equal $105 million and average daily trading volume is 5K shares. As of late March 2012 the annual dividend yield was 3.10% and YTD return 11.09%. The one year return was -.02%.

          Poor performance has much to do with the "Arab Spring" causing market disruption throughout the Middle East in particular. Another important feature is the overwhelming weight in South Africa (90%) vs the more balanced approach compared to AFK you might just as well own EZA.

          Data as of Late March 2012

          GAF Top Ten Holdings & Weightings

            Mtn Group Limited (MTNOF): 7.59%

            Sasol, Ltd. (SOL): 6.80%

            Naspers, Ltd. (NPN): 6.19%

            AngloGold Ashanti Limited (AULGF): 4.36%

            Standard Bank Group Ltd. (SBK): 3.87%

            Firstrand Limited (FSR): 3.27%

            Gold Fields Limited (GFI): 3.21%

            Impala Platinum Holdings (IMP): 2.98%

            Shoprite Holdings Limited2 (SHP): 2.30%

            Bidvest Group (BDVSF): 1.84%

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            #5: Van Eck Africa ETF

            (AFK)

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            AFK follows the Dow Jones Africa Titans 50 index which consists of companies either based in Africa or earning a majority of their revenues there. The fund was launched in July 2008. The expense ratio is .78%. AUM equal $77 million and average daily trading volume is 20K shares. As of late March 2012 the annual dividend yield was 3.31% and YTD return 14.65%. The one year return was -5.72%.

            Here too the "Arab Spring" and investor avoidance of riskier sectors in the second half of 2011 had a negative impact on results causing significant volatility.

            Data as of Late March 2012

            AFK Top Ten Holdings & Weightings

              Tullow Oil PLC (TLW): 7.03%

              Nigerian Breweries PLC: 6.89%

              Orascom Construction Industrie: 5.32%

              Attijariwafa bank (BCMA): 5.03%

              Old Mutual PLC (OML): 4.79%

              Maroc Telecom (IAM): 4.28%

              Guaranty Trust Bank PLC GDR (GRTB): 3.91%

              First Quantum Minerals Ltd. (FM): 3.73%

              Sasol, Ltd. (SOL): 3.67%

              Randgold Resources, Ltd. ADR (GOLD): 3.62%

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              #4: iShares South Africa ETF

              (EZA)

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              EZA follows the MSCI South Africa Index which tracks the overall South Africa equity market. The fund was launched in February 2003. The expense ratio is .61%. AUM equal $536 million and average daily trading volume is 266 shares. As of late March 2012 the annual dividend yield was 2.87% and YTD return 10.46%. The one year return was -.67%.

              As most know South Africa is a resource rich country with excellent reserves of precious and base metals. Perhaps little known is the country has a good demographic base giving a boost to a growing consumer sector.

              Data as of Late March 2012

              EZA Top Ten Holdings & Weightings

                Mtn Group Limited (MTNOF): 10.49%

                Sasol, Ltd. (SOL): 9.99%

                Naspers Ltd (NPN): 7.36%

                Standard Bank Group Ltd. (SBK): 6.02%

                AngloGold Ashanti Limited (AULGF): 5.68%

                Gold Fields Ltd (GFI): 3.93%

                Impala Platinum Holdings (IMP): 3.86%

                Firstrand Limited (FSR): 3.08%

                Remgro, Ltd. (REM): 2.63%

                Shoprite Holdings Limited2 (SHP): 2.53%

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                #3: iShares Israel ETF

                (EIS)

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                EIS follows the MSCI Israel Capped Investable Market Index which follows the large cap issues within the Israeli stock market. The fund was launched in March 2008. The expense ratio is .61%. AUM equal $75 million and average daily trading volume is 15K shares. As of late March 2012 the annual dividend yield was 3.39% and YTD return 6.09%. The one year return was -30.54%.

                You'll note in the holdings that Teva Pharmaceuticals is the dominant holding and has been a popular institutional investment in the sector.

                Data as of Late March 2012

                EIS Top Ten Holdings & Weightings

                  Teva Pharmaceutical Industries Ltd (TEVJF): 26.66%

                  Israel Chemicals Ltd. (ISCHF): 9.54%

                  Bank Hapoalim B.M. (5BK): 6.96%

                  Bank Leumi Le-Israel: 6.93%

                  Nice Systems Ltd: 4.25%

                  Bezeq The Israel Telecommunication Corp Ltd: 4.14%

                  The Israel Corp: 2.85%

                  Mellanox Technologies, Ltd. (MLNX): 2.41%

                  Israel Discount Bank Ltd. (5I7): 2.08%

                  Mizrahi Tefahot Bank Ltd. (5MT): 2.07%

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                  #2: iShares Turkey ETF

                  (TUR)

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                  TUR follows the MSCI Turkey Investable Market Index which measures the overall performance of the Turkish equity market. The fund was launched in March 2008. The expense ratio is .61%. AUM equal $415 million and average daily trading volume 287K shares. As of late March 2012 the annual dividend yield was 2.25% and YTD return 24.96%. The one year return was -16.35%.

                  Severe negative performance in 2011 was the result of domestic unrest between the military, secular and non-secular groups. In addition investor flight from high beta markets was another concern along with MENA unrest overall. That said, Turkey is one of the sole functioning Islamic democracies in the region and has a large and growing consumer sector.

                  Data as of Late March 2012

                  TUR Top Ten Holdings & Weightings

                    Turkiye Garanti Bankasi A.S. (GARAN): 12.68%

                    Akbank TAS (AKBNF): 7.66%

                    Turkcell Iletisim Hizmetleri AS (TCELL): 6.72%

                    Turkiye Is Bankasi Class C (ISCTR): 5.96%

                    Tupras-Turkiye Petrol Rafineleri A.S. (TUPRS): 4.92%

                    Anadolu Efes Brewery ve Malt Sanayi A.S. (AEFES): 4.88%

                    Bim Birlesik Magazalar A.S. (BIMAS): 4.67%

                    Koc Holding A.S. (KCHOL): 4.00%

                    Turk Telekomunikasyon (TTKOM): 3.58%

                    Haci Omer Sabanci Holding A.S. (SAHOL): 3.51%

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                    #1: Van Eck Russia ETF

                    (RSX)

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                    RSX follows the DAXglobal Russia+ Index which includes companies based in Russia, trading in Russia or on leading exchanges globally. The fund was launched in April 2007. The expense ratio is .62%. AUM (Assets under Management) equal $2 billion and average daily trading volume is 4M shares.  As of late March 2012 the annual dividend yield was 1.77% and YTD return 15.65%. The one year return was -23.58%.

                    Russian markets are dominated by energy and other commodity markets. As they go, so goes RSX.

                    Data as of Late March 2012

                    RSX Top Ten Holdings

                      Gazprom OAO ADR (OGZPY): 7.95%

                      Sberbank of Russia OJSC: 7.58%

                      Rosneft Oil Company OJSC GDR (ROSN): 7.35%

                      LUKOIL Oil Company JSC ADR (LUKOY): 6.53%

                      Novatek OAO GDR (NVTK): 5.94%

                      MMC Norilsk Nickel JSC ADR (NILSY): 5.31%

                      Bank for Foreign Trade Vneshtorgbank JSC VTB Bank GDR (VTBR): 4.43%

                      Surgutneftegas OJSC (SGTZY): 4.41%

                      Gazprom Neft OJSC (GZPFY): 4.17%

                      JSC Uralkali GDR (URKA): 3.97%

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                      We rank the top 10 ETF by our proprietary stars system as outlined below. But given the diversity of this sector making these choices becomes a greater challenge.

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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

                      This is an eclectic assortment of ETFs that hold modest investor interest and at least some curiosity. Individually the ETFs within this category needed a logical home and this collection seems logical enough. Frankly, the first five issues may hold some appeal both in liquidity and performance.

                      In Africa and MENA (Middle East and North Africa) the so-called "Arab Spring" has dominated conditions and markets. This event may last for many years. This uncertainty roils markets and rubs off on others within the region like Turkey and AFK for example.

                      Russia has no logical partner but like South Africa is resource rich and dominated by activity in related commodity markets. Both can exhibit great volatility and investors may not be rewarded by a casual attitude with them. This is why our technical views are more important.  

                      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 issues may or may not be in the works. Any new issues (RSXJ for example) would need some seasoning to gain a higher ranking from our view.

                      For further information about portfolio structures using technical indicators like DeMark and other indicators, take a free 14-day trial at

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                      The ETF Digest has a long position in EZA.

                      The opinions and/or guidance provided herein should not be construed as investment advice and are merely the general opinion of the ETF Digest.

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

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