Posted 12/02/2009 11:43 a.m. EST When the iShares MSCI Emerging Market Europe ETF ( ESR) launched at the end of September, I mentioned that it will face strong competition from the SPDR S&P Emerging Europe ETF ( GUR), which has been around since March 2007 and charges a low 0.59% expense ratio. Today, with ESR completing its second month of active trading, it appears that my suggestion to stick with GUR has held up. Although the older fund's performance has lagged ESR for the most recent one-month period ending Dec. 1, ESR's higher 0.72% expense ratio appears to have deterred many investors from adding the new fund to their portfolios. GUR has an average trading volume of over 136,000, while ESR barely breaks 13,000. GUR's attractiveness has led me to include it on my ETF Action watch list. On the basis of the internal aspects of the two instruments, it is apparent that, while they seek to expose investors to the same region, important differences will cause their long-term performances to diverge. Looking at the fund's top holdings, two things become apparent. First, ESR is more top-heavy than GUR. The iShares fund has nearly 50% of its assets allocated to its top five firms, while the SPDR tool allocates slightly over 40%. Second, both instruments are most heavily weighted in the same five companies. These firms include the Russian giants Lukoil, Gazprom, Rosneft and Sberbank, and JSC MMC Norilsk Nickel. Russia is the biggest representative for both funds, making up nearly 75% of ESR and 64.5% of GUR. While both allocate most of their assets to Russia, GUR is slightly more geographically diverse than ESR. The fund taps into the markets of five nations, while the iShares instrument accesses only four. Aside from offering exposure to Russia, both funds offer exposure to the Czech Republic, Hungary and Poland. GUR also includes Turkish firms. Since its launch, ESR has managed to accrue only $5.4 million. This puts the fund well behind GUR, which has grown to more than $181 million in assets under management since launching in March 2007. I continue to advise investors looking for exposure to emerging Europe to follow my lead and go with GUR. With a less heavily weighted portfolio, better geographic diversification, cheaper expense ratio, and stronger volume, this fund remains a more stable instrument for a long-term play. GUR underperformed ESR in the past two months because of the underperformance of Turkey, but this presents a buying opportunity for investors looking for exposure to this part of the world.