The evolution of the ETF industry has made at least one thing perfectly clear: investors of all stripes love being able to access global markets, both developed and emerging, via ETFs. Without ETFs, it would be downright difficult, and perhaps cost-prohibitive to access markets like Egypt, Poland and Thailand. Country-specific ETFs exist for those obscure markets and dozens more.

IN PICTURES: 10 Reasons To Add ETFs To Your Portfolio

The crucial thing for investors to remember is that simply because a country has a corresponding ETF, that does not mean it is a good ETF. In fact, it is possible for an investor to pick the right region and the wrong ETF. Fortunately, a little bit of homework will help you avoid the quagmire of picking the wrong country-specific ETFs.

Our list does not include every country ETF worth avoiding, but it does highlight three of the more troublesome issues in the current market environment.

Right Region, Wrong ETF
It is possible for an investor to spot the right region but pick the wrong ETF, and no region makes this more possible than Asia. We're not talking about choosing Japan over China or India, although that would be a mistake as well. We're focusing more on Southeast Asia, specifically Vietnam.

This region has several enticing investment options that can be accessed via ETFs. Vietnam is not one of those alluring options, so stay away from the Market Vectors Vietnam ETF (NYSE:VNM). Vietnam recently devalued its currency, the dong, but Credit Suisse says challenges still remain for the Vietnamese economy.

A recent report by the bank said that while valuations on Vietnamese stocks are more appealing than they have been at anytime over the past four years, further declines would be necessary before the bank would be constructive on the Vietnam market. In the past three months, VNM has been thrashed by comparable ETFs that focus on Indonesia and Thailand.

Irish Eyes Aren't Smiling
Ireland is one of the countries in Europe that has been on the receiving end of quite a bit of punishment thanks to the eurozone's sovereign debt woes. Europe recently wrapped its banking stress test, where only seven of the 91 tested banks did not pass, but it appears Ireland's banks are a real source of trouble and that could be bad news for the iShares MSCI Ireland Capped Investable Market Index Fund (NYSE:EIRL).

Financials account for 13% of the ETF's weight and that's a glaring weakness considering Anglo Irish Bank has taken more than 25 billion euros in bailout money and Bank of Ireland recently reported a first-half loss that doubled from the first half of 2009. EIRL is a fairly new ETF, so its trading volume and assets under management aren't strong at this point. By themselves, those would be reasons to avoid the ETF, but the fundamentals also say stay away.

Doomed By a Change in Status
To be certain, Israel is by far the least risky of the markets mentioned here, but that doesn't mean it's profitable to be bullish on the iShares MSCI Israel Capped Investable Market Index Fund (NYSE:EIS). Israel's status as an emerging market was stripped earlier this year and the country is now considered a developed market. That's bad in the world of ETFs because emerging markets ETFs typically outperform their developed world counterparts.

Also noteworthy is the fact that the Harvard Management Company, the university's massive endowment fund, sold all of its interests in Israeli stocks in the second quarter, including some of EIS's top holdings. While the ETF has caught a decent bounce off its July low, EIS has been in a tailspin since April and down volume has consistently outpaced up volume.

Israel, and therefore EIS, is risky bets because of geography and political issues. Any increase in tensions in the Middle East could lead to a field day for EIS bears.

Not Much to See Here
In the near to medium-term, none of these ETFs belong on a conservative investors watch list. A longer-term investor interested in Israel could probably start a position in EIS at a better price than where the ETF currently trades. VNM is pure speculation and probably only worth a look for short-term traders. EIRL needs volume and assets to increase and Ireland's macroeconomic picture to improve before that fund becomes worth your trouble. (To learn more, see Broadening The Borders Of Your Portfolio.)

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