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If talks between the two Koreas or the political strife in the Middle East have got you wondering if these hot spots are investing opportunities in disguise, experts say proceed with caution.

The investing community has been more than happy to oblige those who are looking to invest in a particular geographical area. A few funds that invest in troubled nations in regions like Eastern Europe and the Middle East have popped up this year in the form of single-country or regional funds. But analysts say that investing in the stocks of one country alone is rarely a good idea for the average investor.

"Single country emerging market funds are far too risky for almost everyone, and regional emerging market funds are also generally too risky," says


senior analyst William Rocco.

Experts advise investors to remember that just because a country has undergone a democratic revolution or has opened up its markets to the West doesn't necessarily mean it's ready for foreign investments. On the other hand, just because a country is experiencing turmoil doesn't mean there aren't some good, solid growth companies to invest in -- witness Israel's tech boom amid the deteriorating peace process.

For those who have an affinity for a certain region or nation or have a very long time frame, a small amount of their portfolio in a single country or regional fund would be appropriate, says Rocco. But if investors do take the plunge, they need to be prepared for a wild ride.

Foreign stock funds, in general, are down 12.2% so far this year, and have posted average annual gains of 4.6%, 11.9% and 10.8% in the one-, three- and five-year periods, respectively, according to Morningstar. A look at Japan funds shows a much more volatile story, with the average fund down 23% so far this year, while posting a loss of 10.3% for the 12 month period. For the three- and five-year periods, meanwhile, Japan funds showed gains of 15.4% and 3.6%. Emerging market funds have fared even worse, losing 23.6% this year, 4.4% and 3.3% in the one- and three-year periods, and gaining only 0.5% in the five-year period.

"The first thing that someone has to know is that it's a long-term play," says David Molnar, portfolio manager of the $22 million


Vontobel Eastern European Equity fund. "As part of someone's portfolio, I would imagine that emerging markets and risky markets like this would be an addition if somebody already has their portfolio."

For those who can't resist dipping into foreign waters, a few single-country and regional funds are looking to capitalize on the growth potential of their geographical mandate. One volatile region that has attracted the attention of mutual fund managers of late is Israel and the Middle East.

The $30 million

(AMDEX) - Get AMIDEX35 Israel E Report

Amidex35, which tracks the 35 largest Israeli companies that are traded on the

Tel Aviv Stock Exchange

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, the

New York Stock Exchange

and the


, has been one of the more successful single-country funds.

The tech-heavy fund's holdings include internationally focused companies like

Check Point Software

(CHKP) - Get Check Point Software Technologies Ltd. Report


Teva Pharmaceuticals

(TEVA) - Get Teva Pharmaceutical Industries Limited American Depositary Shares Report

, which have helped shield the fund from the continuing street violence. The fund has posted a 25.5% return this year, and fund manager Boaz Rahav says the turmoil in the region has been a nonevent for the fund. Indeed, tech sell-offs in the U.S. have affected the fund more than strife in the region -- the second quarter tech sell-off in the U.S. gave the Amidex its worst-performing quarter this year, with a 3.4% return.

T. Rowe Price's

$27 million

(TREMX) - Get T. Rowe Price Emerging Europe Report

Emerging Europe and Mediterranean fund, which was started Sept. 1, takes a similar view of Israel. The fund's top 10 holdings include Teva and Check Point along with Russian oil company


and Turkish financial services house

Turkiye Garanti Bankasi

. The fund is down 7.7% since its inception.

The tiny $250,000 Kinetics Middle East Growth fund, down 22.4% since its inception March 30, takes a more local view of the region by investing in companies that stand to benefit from the local economy. Some of this fund's largest investments include Egyptian blue-chip

Al-Ahram Beverages

and Lebanese real estate concern



Kinetics Middle East Growth fund manager Steven Bregman admits that the fund is not for the faint of heart, but argues that investing in companies that are focused only on local markets can give investors diversification that they wouldn't get with multinational conglomerates. He also argues that many of the region's internationally focused technology companies are more volatile since they are prone to the steep rises and drops the tech sector is known for.

"If you buy an international portfolio, you're buying the


and the


of the world," says Bregman. "If anything were going to happen to the U.S., it's going to happen to them too."

So if you think Eastern Europe or North Korea are the next big areas to explode and you want to get a piece of the action, first see what the experts are doing. Many fund managers may not be investing in a particular region because of the difficulty in finding liquid companies. Further complicating matters is the challenge of finding accurate financial information about those companies.

Mark Headley, portfolio manager of the

(MAKOX) - Get Matthews Korea Investor Report

Matthews Korea I fund says he doesn't expect a stock exchange to emerge in North Korea in the next five years.

"There will undoubtedly be ways to participate in North Korea, but they will be limited and minor," says Headley, who thinks that the most likely short-term scenario will be to see South Korean companies investing in North Korea.

"It really depends on if we can find attractive stocks with good liquidity," agrees Dale West, analyst at the T. Rowe Price Emerging Europe and Mediterranean Fund.

"For instance, I recently visited Estonia, a country that's done a lot of things right in terms of individual reform, but there's not a lot of stocks to invest in. That's a frustration."