We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of high-quality stocks.

ISHARES MSCI SOUTH KOREA INDEX FUND (New York Exchange symbol EWY; buy or sell) is an exchange traded fund that aims to track the MSCI Korea Index.

The ETF’s top holdings are Samsung Electronics, 21.9%; Hyundai Motor Co., 5.3%; Posco (steel), 3.8%; Hyundai Mobis (auto parts), 3.4%; SK Hynix Semiconductor, 2.7%; Shinhan Financial, 2.5%; Kia Motors, 2.4%; KB Financial, 2.3%; LG Chemical, 2.2%; and NHN (Internet content), 1.8%.

The fund’s industry breakdown is as follows: Information Technology, 32.1%; Consumer Discretionary, 17.4%; Financials, 13.6%; Industrials, 13.2%; Materials, 10.5%; Consumer Staples, 5.6%; Energy, 3.2%; Utilities, 1.6%; Telecommunication Services, 1.2%; and Health Care, 0.9%. iShares MSCI South Korea Index Fund was launched on May 9, 2000. The ETF has an expense ratio of 0.60%.

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South Korea looks for accelerated growth after limited expansion in 2012

iShares MSCI South Korea Index Fund was launched on May 9, 2000. The ETF has an expense ratio of 0.60%. South Korea has Asia’s fourth-largest economy after China, Japan and India. The country is heavily reliant on exports, and China is now its biggest market.

Still, South Korea’s economy will likely grow 3.2% this year, and as much as 3.9% in 2014. It likely expanded by just 2.2% in 2012.

South Korea has just elected a new president, Park Guen-hye, the daughter of the country’s dictator from 1961 to 1979, Park Chung-hee.

South Korea’s communist neighbour, North Korea, remains a serious threat. But China wants peace in the region, and North Korea needs China’s continued goodwill for food and military aid.

In the latest issue of Canadian Wealth Advisor, we look at how the steady rise of South Korea’s currency, the won, is affecting the country’s economic outlook and especially its exporters, who compete directly against exporters from Japan and China. We conclude with our clear buy-hold-sell advice on this ETF.

COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members

From the time the Japanese economy began to attract widespread admiration in the 1970s to the rise of the Chinese and Indian economies in recent years, many have claimed that Asia is destined to be the leading economic zone in the world. If so, do you believe Canada will benefit from this development? How do you think other “older” economies like the U.S. and Europe will be affected? Do you invest directly in Asian economic growth, whether through funds or individual stocks? Let us know what you think.