At another firm, Van Eck Global, marketing director Edward Lopez estimates that roughly 45% of the $3.6 billion in assets in the firm's 13 single region and country emerging-market ETFs comes from financial advisors. Last year, falling returns in most emerging markets prompted many investors to sell their positions, he says.

But as markets improve this year, a number of the firm's Market Vectors ETFs are seeing strong investor inflows again. In January alone, the Market Vectors Indonesia Index ETF (IDX) took in $112 million, while the Brazil Small Cap ETF (BRF) drew $58 million and the Market Vectors Russia ETF (RSX) attracted $109 million.

Portfolio Strategies
Financial advisors who've already begun using ETFs to fine-tune emerging-market exposure say they can be a good way to refine strategies in the asset class. "We prefer to have the mutual funds as the core of emerging market portfolios because we believe the right managers can add value," says Ron Weiner, the president of RDM Financial in Westport, Conn. "At the same time, we periodically use focused emerging-market ETFs to fill in some of the gaps in those funds."

Two years ago, for example, Weiner's analysis showed that the three emerging-market mutual funds his firm invested in were relatively light in Latin America, an area he believed was ripe for growth because of its growing population and abundant natural resources. To shore up holdings in the region, he purchased the iShares MSCI Brazil Index fund (EWZ).

By the beginning of 2011, his firm had about 10% of its equity assets in emerging markets; about 4% was allocated to the Brazil fund and to another focused ETF, the EG Shares Emerging Markets Consumer ETF (ECON). But as the markets began to slide, he sold the ETFs early in the year, while continuing to hold on to the mutual funds.

"I like that I can use the narrowly focused ETFs as positions that I can micromanage without having to make a big bet," he says. "It's easy to add to or lighten up around the edges with positions that account for a small part of the portfolio."

Weyman Gong, the chief investment strategist at Signature Financial Management in Norfolk, Va., uses the "Big Two" emerging market ETFs as well as actively managed mutual funds as core holdings, and then uses single-region ETFs as satellites around those positions. "Many people lump emerging markets into one big group," he says. "But Brazil and Russia have very different dynamics from China."

Slower growth in China has raised concerns among some investors. The World Bank expects gross domestic product growth in the country to come in at 8.4% this year when it was 9.2% last year and 10.3% in 2010.

Gong still believes China's stock market will outperform others. "Even though Asian economies are growing more slowly than they have in the past, they continue to outpace growth in developed countries," he says. "And because the equity markets in Asia were punished so severely last year, the valuations in China and other Asian markets are still quite reasonable." To overweight the region, Gong uses an actively managed mutual fund as well as the iShares MSCI China Index Fund (MCHI) and the iShares MSCI All Country Asia ex-Japan fund (AAXJ).

Picking A Spot
For those considering more focused emerging-market ETF exposure, the question is which countries and regions to emphasize. Among analysts, there's a wide difference of opinion on that subject.