Already a power-player in the U.S. ETF industry, iShares is seeking to expand its operations throughout South America. The expansion would allow iShares to expand its presence in foreign stock exchanges, while bringing ETFs back to the U.S. through ADRs.

Much of the expansion is riding on the success of iShares’ new Chilean ETF, which is set to launch this year. However, before even launching the first fund, iShares staked claim to the southern hemisphere, filing to create funds in Brazil, Columbia and Argentina, according to Bloomberg. While the new funds are in planning stage, Daniel Gamba of Barclays Global Investors has high hopes for new funds, saying, “Emerging markets are going to keep outperforming the developed world in the next two years.”

The expansion is well received by American investors seeking easier access to foreign markets. Thus far this year, emerging market ETFs have led the inflow charts, helped by a dreary outlook on the future of the U.S. economy.

The Colombian market has never been more accessible to U.S. investors. Global X Management Company, along with leading Colombian broker InterBolsa S.A. Comisionista de Bolsa, has just released a new ETF on the NYSE Arca that provides a convenient way to capture the country-specific performance. PRNewswire identifies the new fund as Global X/InterBolsa FTSE Colombia 20 ETF (GXG: Quote, Profile, Advanced Chart, News) and explains that it will track the FTSE Colombia 20 Index, which is made up of the 20 most liquid securities in Colombia. Examples of companies found in the index are oil firm Ecopetrol and utility firm Interconexion Electrica. With the release of GXG, investors now have the ability to reach the “relatively untapped” market of Colombia, according to PRNewswire.

On June 12, 2008, Claymore Securities and The Bank of New York Mellon pioneered the only U.S.-listed frontier market ETF, known as Claymore/BNY Mellon Frontier Markets ETF (FRN). Two weeks after the launch of FRN, Claymore has announced a change to the underlying index meant to rebalance the markets. As a result of the change, The BNY Mellon New Frontier DR Index has added three more country markets to the mix, according to the Business Wire press release. The countries that have been added include Kuwait, Estonia, and Ukraine, which now brings the market exposure to 17 countries. According to Business Wire, the countries that now make up FRN are as follows: Bahrain, Chile, Columbia, Czech Republic, Egypt, Estonia, Georgia, Kazakhstan, Kuwait, Lebanon, Nigeria, Oman, Pakistan, Peru, Poland, Ukraine and United Arab Emirate. Christian Magoon, President of Claymore and Head of its ETF Group, states, "With its expanded 17 country-composition, FRN continues to provide frontier investors with access to this intriguing growth opportunity.

By June of 2009, a handful of countries could have a new MSCI market classification. MSCI Barra has begun discussions on the potential upgrade of South Korea and Israel. Polya Lesova of Market Watch writes that the two countries, currently listed as emerging markets, may be raised to developed market status. South Koreas currency convertibility could be a major obstacle; however, as international investors have shown concern with the won. Other possible upgrades include the transition of Kuwait, Qatar, and United Arab Emirates from frontier markets to emerging markets as they continue to make progress. The emerging market performances are tracked by iShares MSCI Emerging Markets ETF (EEM).

While some countries have shown signs of growth and have a chance at improving their MSCI status, other markets have slowed down. The Market Watch article explains that each of these reclassifications will be reviewed for months before making a final decision. However, MSCI has already decided on the downgrade of Jordan to a frontier market from its prior emerging market classification. The decision came primarily in response to its size and lack of liquidity. Other markets in danger of similar downgrades are Colombia and Argentina. Market Watch claims that these two markets have until December to make some "significant improvements of capital flow restrictions. A Citigroup Global Markets analyst shared insight into the magnitude of these discussions saying, "MSCI is taking an important step towards making some of the most significant changes to the composition of the emerging markets indices since the reclassification of Portugal (1997) and Greece (2000) as developed markets several years ago.”