There are approximately 76 international players from 31 countries and territories playing in the National Basketball Association. This diversity can be a guide to help investors increase their international exposure.

The strength of international talent gives NBA teams a larger pool of recruits while giving the league access to new markets. Investors can aim to capture the same international synergies the NBA hopes to gain from going international by selecting a basket of exchange-traded funds (ETF). Let's have a look at our international line up. (To learn more about this investment vehicle, read our Exchange-Traded Funds Tutorial.)

Region/
Country
# of Players Corresponding Fund YTD Returns
Europe 45 Vanguard Europe Pacific ETF
(AMEX:VEA)
-14.72%
Central/South America and Caribbean 17 iShares Latin America 40 Index
(PSE:ILF)
-4.34%
Africa 6 Market Vectors Africa Index
(PSE:AFK)
-5.9%
Canada 4 iShares MSCI Canada
(PSE:EWC)
-8.30%
Asia Pacific 2 BLDRS Asia 50 ADR Index
(Nasdaq:ADRA)
-13.72%
China 2 SPDR S&P China
(AMEX:GXC)
-26.52%
Total 76 - -
U.S. Benchmark - SPDR S&P 500 (AMEX:SPY) -10.64%
Year-to-date returns as of August 8, 2008.

European Influence
European players represent nearly 60% of the international players in the NBA suggesting that the largest portion of your portfolio would focus on an ETF like the Vanguard Europe Pacific ETF. This fund is heavily weighted with companies in the U.K., Japan and France. Familiar names in the portfolio include Nestle (OTC:NSRGY) and energy companies like London based BP (NYSE:BP) and Total SA (NYSE:TOT) out of France. The fund does not have a long track history, although it is well diversified across more than 1,000 companies. Its recent returns suggests investors should focus on overweighting their portfolio outside of Europe.

Latin American Strength
Behind Europe the second largest group of international players hails from Central/South America and the Caribbean. The iShares Latin America 40 Index with its heavy focus on Brazilian mining, energy and banking companies has given investors more than a 30% return over the previous three years. Top holdings include Companhia Vale (NYSE:RIO), Brazilian Petroleum Corporation (NYSE:PBR) and Banco Itau (NYSE:ITU).

Emerging Markets
Yao Ming is the most recognizable Chinese born player in the NBA. While China's economic impact is undeniable, investments tracked by ETFs focused on the country have fallen in the neighborhood of 30% since the beginning of the year. The limited number of players represented by the country in the NBA suggests a small allocation for an investment portfolio. The limited exposure to the fast growing, but volatile Chinese market could have protected the investors against the emerging markets correction. The SPDR S&P China ETF, with a heavy allocation in China Mobile (NYSE:CHL), offers investors a pure China investment that has fallen less than its peers year to date.

Frontier Markets
Investments that focus on sub-Saharan African countries like Kenya and Ghana are relatively new and should be approached with caution. The small number of African players in the NBA could be viewed as another indicator for the amount of exposure to take on in a portfolio.

Final Thoughts
International stars with cool sounding names like Peja Stojakovic of the L.A. Lakers (Serbia) and Dikembe Mutombo of the Houston Rockets (Democratic Republic of the Congo) are fan favorites and highlight the diversity of the NBA's global reach. The NBA is showing fans that the future of the game resides outside of the U.S. An investor's portfolio should reflect a similar worldly view.

To learn more, read The Importance of Diversification.

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