Everyone wants a piece of China's explosive growth, said Matt Hougan, president of ETF analytics and editor of IndexUniverse. And there is no shortage of investment options.
While conventional wisdom might say bigger is better, that's not always the case. For example, the biggest China-centric ETF -- iShares FTSE China 25 Index Fund (FXI) -- represents the performance of the 25 largest companies in the Chinese stock market, most of which are owned by the state. But the rest of the Chinese economy is also strong and vibrant, so Hougan instead recommends buying the SPDR S&P China ETF (GXC), which gives investors exposure to the broader economy by including smaller companies, as well as the bigger names.
"It's like investing in the companies in the Russell 3000 (RUA) instead of just the Dow industrials (INDU)," Hougan said.
Bill Witherell, chief global economist at Cumberland Advisors, also likes South Korea and Taiwan. His favorites include the iShares MSCI South Korea Index Fund (EWY) and iShares MSCI Taiwan Index Fund (EWT).
Don't buy: The sovereign debt crisis in Europe is far from over, so that might be a region to stay away from in the near term, said David Kastner, market strategist at Charles Schwab Investment Advisory.
European stocks continue to be under pressure, weighed down by ongoing fiscal troubles in Portugal, Ireland, Italy, Greece, and Spain, the so-called PIIGS. ETFs such as the iShares MSCI European Monetary Union Index fund (EZU) are still risky until the region's political leaders work out a plan that ensures the longevity of the euro, Kastner said.
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