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Tickers in this Article: EWW, AMX, CX, TMX, EFA, SPY
As the weak U.S. dollar makes foreign market securities more appealing, the Mexican peso has been trading near six-year highs. After the U.S. stock market hit its peak last October, the iShares MSCI Mexico Index (AMEX:EWW) carried forward as a stronghold for investors seeking Latin American exposure.

Although Europe, Australia and the Far East (EAFE) may be the first place investors turn to for international exposure, a tour south of the border may offer additional diversification to absorb market declines.
ETF Index Comparison
Exchange-Traded Fund

One-Year Return*
iShares MSCI EAFE Index
iShares MSCI Mexico Index
*As of June 30, 2008
Let's now take a closer look at the holdings that have helped give the iShares MSCI Mexico Index ETF its staying power. (To learn more, check out An Insider Look At ETF Construction.)

Wireless Provider
America Movil S.A.B. de C.V.
(NYSE:AMX) makes up nearly 24% of the iShares MSCI Mexico Index (EWW). America Movil is one of the largest providers of fixed line and wireless communications in Latin America with over 165 million subscribers. Strong subscriber growth in Brazil, Mexico and Columbia helped America Movil reach a net profit of 17.7 billion pesos ($1.72 billion, June 30, 2008) during Q2. America Movil was recently awarded a license to expand its wireless network into Panama.

Building Materials
Cement, ready mix concrete and building materials provider Cemex S.A.B. de C.V. (NYSE:CX) makes up nearly 11% of EWW. Net revenues for its fiscal year ending June 30 increased 19% from the previous year to $21.7 billion generating nearly $3 billion in operating income. A recent acquisition of aggregate and ready mix concrete maker Rinker is expected to help Cemex expand its presence in the U.S. and grow its market share in Australia. (For further reading, be sure to check out The Basics Of Mergers And Acquisitions.)

Broadband Provider
Telefonos de Mexico
(NYSE:TMX) is a fixed line telecommunications provider. At the end of the second quarter Telefonos de Mexico reported nearly 10 billion pesos ($974 million) in operating income on revenues of 30.9 billion pesos ($3 billion), 6.3% lower than the previous year. Similar to U.S. telecom providers, Telefonos de Mexico's local and long distance revenue is falling in comparison to its growing internet service and corporate networks business lines. Telefonos de Mexico lost 3% of its subscribers from the previous year taking its total service lines down to 17.7 million. The company lost nearly half of its value in early June, highlighting the benefit of diversification.

Final Thoughts
Diversification with exposure to a wide array of international locations is essential for investors whose portfolios have the time to sustain short-term volatility. Investing in only a few regions while ignoring the world of opportunity can clearly do more harm than good.

To learn how to use ETFs for diversification, read Finding Fortune In Foreign-Stock ETFs.

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