ETF’s are a relatively safe way to invest in the stock market. It is often the preferred way to invest for inexperienced investors or those who don’t have much to invest. It allows you to diversify even the smallest of portfolio’s without the cost of buying many different stocks. With the markets in recession mode, here are some ETF’s that you might consider:

MOO – Agriculture is one of the more bullish areas of the market and this is a good way to play the sector. This ETF has 3 of my favorite names in agriculture including Monsanto (MON), Mosaic (MOS) and potash (POT). A recent 15% pull-back presents a great buying opportunity.

TAO – This ETF covers the real estate market in China, Hong Kong and Macau. While some of the high flying Chinese stocks and the major indices in Shanghai are due for a pull-back, China is still growing at over 11% and wealth creation is in full swing. As more people migrate to the middle-class, there will be an increase in urbanization, resulting in an increased demand for home ownership, office space and investment properties.

VWO – EEM has been the ETF of choice for investing in emerging markets, but VWO is a good alternative that emerged last year. In fact, since summer of last year, VWO has outperformed EEM slightly and has a lower expense ratio (0.3% to EEM’s 0.74%).

EWS – Singapore is the new Switzerland where wealthy investors are looking to store money in banks, invest in their businesses and their currency. GDP per capita is higher than anywhere else in the world and the markets there have been rising steadily for a few years. Over the last 5 years, EWS is up 200%.

TKF – Turkey is one of those second-tier emerging markets that have not appreciated as much as the BRIC, but at the same time, do not carry the political risk of countries like Pakistan. The government of Turkey has been making great strides in westernizing their financial markets and economic engines in hopes of realizing a favorable ruling regarding getting inducted in the European Union. I like TKF as a less risky emerging market.

For those who want to hedge their portfolios against market declines or want to make money betting against the market, here are some short ETF’s:

EUM – If you think the emerging markets are headed for a further tumble, this is a bet against the BRIC and other emerging markets. It would have been better to own this at Dow 14,000 but if you believe we are in a bear market and a recession is upon us, this is a smart bet.

EEV – This is an ultra-short emerging market ETF, which means that it has double the volatility of the emerging markets. It magnifies the overall emerging market move by going sharply in the opposite direction of the emerging markets. Like EUM, this one is a great hedge against any international exposure you may currently have in your portfolio.

FXP – This is another ultra-short ETF, but this time you are betting against FXI, the Xinhua China 25 stocks. China is growing fast, but some people believe that the Chinese economy will slow down considerably if the US economy slumps into a prolonged period of recession. If you agree with those people, this is a way to make money by betting against the FXI and doubling down on the bet.

There are ETF’s out there for every appetite and almost every level of risk tolerance. Check out James Altucher’s Creative ETF’s on Stockpickr.com.

Happy investing.

Faisal Laljee
Full Disclosure: I own EEV but my position can change anytime without notice.

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