All 16 NETS-brand ETFs from Northern Trust Global Investments (NTGI) are in the same boat; they have declared zero year-end capital gains distributions for the entire product class. The expanding group of NETS ETFs provides access to various markets around the world. A PRNewswire press release reported zero capital gains for 2008 and lists each of the funds, such as Ireland’s market via NETS ISEQ 20 Index Fund (IQE: Quote, Profile, Advanced Chart, News) or Portugal’s market in NETS PSI 20 Index Fund (LIS: Quote, Profile, Advanced Chart, News).

Tax planning becomes even more important this time of year and in this economic setting. According to Peter K. Ewing, head of NTGI’s ETF business, “In this current economic environment, we urge our clients — and investors everywhere — to think very carefully about tax planning and their investment outlooks for 2009. Implementing smart tax planning strategies can prove highly advantageous to the average investor, and ETFs are a very useful tool for effectively lowering your overall tax burden.”

Spa ETF has brought investors access to the Portuguese market with the debut of the country’s first ever ETF. Matt Turner of Wealth Bulletin explains that the new ETF, known as Spa ETF PSI-20, will begin trading on the NYSE Euronext and is designed to track the Portuguese stock market. Spa ETF has partnered with Caixa - Banco de Investimento, a Portuguese bank, to administer the new ETF. Valentim Martins of Caixa - Banco de Investimento speaks of the new fund in the Wealth Bulletin saying, “The huge growth of the ETF industry worldwide has been remarkable and we are convinced that this launch will be a great development for investors in Portugal.” There has been investor demand internationally and within Portugal for access to the country’s market.

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.”

Another two Northern Trust ETFs have hit the market tracking Israel and Portugal. NETS TA-25 Index Fund (TAV) will track Israels Tel-Aviv Stock Exchange. According to Heather Bell of Index Universe, this index is size-specific, made up of 25 stocks with the largest market capitalization. TAV is now in competition with iShares MSCI Israel Capped Investable Market Index Fund (EIS), which launched this past March. Though Northern Trusts expense ratio is slightly more than the iShare brand at 0.70% compared with 0.68%, Ms. Bell explains that Northern Trust would be using the underlying index to attract investors.

The second NETS ETF to come onto the scene connects to the Portugal market. This fund is known as NETS PSI-20 Index Fund (LIS) and will follow the Euronext Lisbon Exchange Index with large cap stocks. Index Universe reports that this is the first U.S. based ETF to monitor. It is yet to be determined how popular this small market will be with investors.

Northern Trust has expanded its NETS (Northern Exchange Traded Shares) portfolio by setting its sights on single-country indexes. As Barclays, State Street, and Vanguard continue to develop their single-country benchmark ETFs, Northern Trust has become part of the action. The MarketWatch article identifies a few of the country-specific ETFs, such as Nets DAX (DAX) for Germany, Nets CAC 40 (FRC) for France, and Nets FTSE 100 (LDN), which tracks the U.K. Additional country ETFs have been filed including Portugal and Israel. Furthermore, Northern Trust is now competing with one of the most heavily traded ETFs being iShares MSCI Japan (EWJ) at Barclays. Northern Trust tracks Japan with Nets Topix (TYI). According to John Spence at Market Watch, the plan for Northern Trust will be to list the ETFs within the most recognized index of each local country.

The concept of investing in a country has become increasingly popular. Paul Mazzilli of Morgan Stanley is mentioned in the referenced article by stating that he has now come across 48 ETFs based on country-specific indexes. Mr. Mazzilli explains these funds by stating, "Although less diversified than other international ETFs, single-country ETFs are usually diversified by companies and sectors.”