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Tickers in this Article: ILF, AMX, PBR, EWZ, EEM, VWO, GXG, ECH, VALE
By now, the story surrounding emerging markets ETFs is well known. Investors in this area of the ETF world were probably sad to see 2009 end, as emerging markets ETFs were simply on fire last year. Take a look at the list of the 10 best performing equity ETFs from 2009. Eight of them were emerging markets plays and the other two have significant emerging markets exposure.

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The top two emerging-market ETFs by trading volume and assets, the iShares MSCI Emerging Markets Index ETF (NYSE: EEM) and the Vanguard Emerging Markets Stocks ETF (NYSE: VWO), combined to gain over $13 billion in new assets in 2009, highlighting the fact that emerging-market ETFs of all stripes were among the top gainers in terms of new investments in 2009. It's no wonder that this asset class is expected to outperform the broader market again in 2010.

In addition, new investments and product creations are expected to be robust this year as more investors embrace the emerging markets thesis. New ETFs are fine and dandy and with so many coming to market every week, investors certainly have their pick of the new kids on the block, but that doesn't mean there aren't opportunities with some established emerging markets ETF. Let's have a look at a few Latin America-focused ETFs that aren't rookies, but may have profits in store for investors in 2010.
ETF Assets
iShares S&P Latin America 40 Index (NYSE: ILF) $3.03 Billion
iShares MSCI Chile Investable Market Index (NYSE: ECH) $284.8 Million
Global X/InterBolsa FTSE Colombia 20 ETF (NYSE: GXG) $7.34 Million

A Broader Approach to Latin America
Brazil has been the dominant market in Latin America, and if you choose to invest in the region, you should have at least some exposure to South America's biggest economy. There are a couple of Brazil-specific ETFs that have done quite well, but another compelling option may be the iShares S&P Latin America 40 Index, which holds about two-thirds of its assets in Brazilian stocks, but also offers investors decent exposure to Mexico and Chile.

Top holdings include familiar names such as America Movil (NYSE: AMX), iron ore giant Vale (NYSE: VALE) and Brazil's state-run oil firm Petrobras (NYSE: PBR). ILF features a good sector mix with five industries each accounting for more than 10% of the ETF's weight, and it is the biggest and most liquid of the names we're highlighting here.

Chile a Hot-Spot for Investors
To give you an idea of how hot Latin America ETFs have been in the past year, the iShares MSCI Brazil Index (NYSE: EWZ) is up 120%, ILF is up just over 100% and the iShares MSCI Chile Investable Market Index is the "laggard" of that trio, up "just" 90%. That result is probably more a byproduct of investors paying greater attention to Brazil rather than Chile lacking a compelling investment thesis.

Quite the contrary. Chile is the world's largest copper exporter, making the South American country a direct play on China's economic boom. Not surprisingly, materials issues account for more than 20% of ECH's sector weight. Metals and materials were among the sectors that drove the market higher in 2009, and that trend has shown little sign of abating in 2010 which makes ECH still worth a look.

A Pick For The Risk Takers
The Global X/InterBolsa FTSE Colombia 20 ETF is easily the smallest and least liquid of the ETFs we're highlighting here. The asset size and trading volume is below what we normally look for, but that doesn't diminish the fact that GXG is up nearly 100% in the past year. Two stocks listed on U.S. exchanges, Bancolombia (NYSE: CIB) and Ecopetrol (NYSE: EC), account for more than 38% of GXG's total holdings, and financials represent more than 45% GXG's sector weight.

Colombia is diligently trying to reshape its image as a war-torn drug exporter, and GDP is forecast to grow there by 2-3% in 2010. This is still a frontier market of sorts and not for the faint of heart. (Learn more about investing in frontier markets, see: Forging Frontier Markets.)

Bottom Line: Stick With The Liquid Names
While a small position in the Colombia ETF may work for investors in 2010, ILF's geographic and sector diversity make it the best bet of the group we've discussed here. That said, Chile cannot be ignored and ECH would be a nice complement to a portfolio that already holds another country-specific LatAm ETF.

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