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) -- Index exchange-traded funds that track broad benchmarks like the Russell 3000 or the MSCI EAFE Index have the large drawback of exposing investors to the worst parts of the market, along with the best, of course, and blending away desirable attributes of some of the index components. The primary benefit of broad benchmarks, however, is that they provide asset class exposure to the many investors who are not comfortable making sector or single country decisions.

This appears to be the audience that specialty ETF provider Global X is targeting with its latest funds -- the

Global X Russell Emerging Markets Growth ETF


and the

Global X Russell Emerging Markets Value ETF


. While there is nothing new about spitting a broad asset class into growth and value, these funds are the first ETFs to do so for emerging markets and the composition differences between the two are quite dramatic.

In choosing one of the two to look less like the

iShares MSCI Emerging Market ETF


, the value fund seems to offer more differentiation. The benchmark iShares fund is heaviest at the country level in China 17%, Brazil 16% and South Korea 14%. The Global X emerging growth fund is heaviest in China 21%, Brazil 21% and India 12%. The Global X emerging value fund is heaviest in Russia at 26% which is unusual for a broad-based emerging-market fund followed by South Korea 25% and Brazil 20%.

At the sector level, the iShares fund is heaviest in financials 24%, materials 14%, energy 14% and technology 13%. The new growth fund allocates 33% to financials, 18% to tech, materials 17% and energy 13%, while the value fund favors energy at a huge 45%, utilities 17% (this includes 5% in

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) with only 10% in financial services.

The lower financial exposure in the value fund looms large for the coming years for anyone thinking that the worst financial crisis in 80 years might have more global shoes to drop. It should also be noted that the huge weighting in energy and Russia are also risk factors. The demand story for energy in China and India, one-third of the world's population, is essentially a one-way trade but that has been the case for years and did not prevent the price of crude oil from dropping by more than two-thirds after peaking at $150 in 2007. That magnitude of decline is always a long shot but should it happen again then the emerging market value fund would obviously get crushed.

Also important is that the value fund has a 14% weighting in


, the Brazilian oil company, specifically 10.5% is in the

Petrobras Preferred

and 3.5% in the common shares of



. The weightings have to do with the flotation of each issue and potential investors need to learn about ongoing political threats confronting Petrobras and a recent dilutive share offering before buying the fund. The growth fund is far less concentrated with the preferred and common issues of Brazilian miner



only adding up to just under 7% of that fund.

In terms of trying to differentiate from the broad iShares MSCI Emerging Market Index Fund, the new value fund will be the better choice. The back test for the emerging market value fund is far superior than for the growth fund with an annualized 10-year return of 19.75% vs. 13.4%. It is not clear that in the future this type of dispersion will persist as the two largest components of the value fund are Petrobras, up 400% during the last 10 years, and


, which was up 990%.

I would instead focus on the value fund providing the opportunity of avoiding more shoes falling on the global financial sector.

At the time of publication, Nusbaum had VALE as a client holding, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback;

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