Indeed, its largest first-quarter investments included:

• $50.9 million in Vanguard Emerging Markets ETF (NYSE: VWO)
• $1.5 million more iShares MSCI Brazil Index ETF (NYSE: EWZ)
• $1.1 million more into in iShares FTSE/Xinhua China 25 Index ETF (NYSE: FXI)
• $877,700 into Van Eck’s Market Vector Russia ETF Trust (NYSE: RSX)
• $817,300 into iShares MSCI Mexico Index Index (NYSE: EWW)
• $390,400 more into iShares MSCI South Africa Index (NYSE: EZA)

Harvard’s fund also took a first-time, $45.5 million position in iShares MSCI South Korea Index ETF (NYSE: EWY), as well as two foreign titans – a $16.7 million stake in China Mobile Ltd. (NYSE ADR: CHL) and a $12.6 million stake in Israel’s Teva Pharmaceuticals Industries Ltd. (NASDAQ ADR: TEVA).

Obviously, an institution such as Harvard does its homework before making such an aggressive play call, and committing so much money to the emerging economies of the world – global regions whose stock markets took even bigger hits than the United States’ Standard & Poor’s 500 Index.

Since the market bottomed out at 676.53 on March 9, the S&P 500 has gained an impressive 34.2%.

During that same span, however, the ETFs that received Harvard endowment dollars have handily trounced the performance of that U.S. bellwether index. Just as an example: Vanguard Emerging Markets ETF is up 58.1% and iShares FTSE/Xinhua China 25 Index ETF has gained 51.2%.

And the overall MSCI Emerging Markets Index ETF (NYSE: EEM) – which measures a 26-country-tracking index of the same name – is up 55.2% since the bottom.

Emerging Market Professors

One of the market professors Harvard is listening to is Robert G. Doll Jr., vice chairman and chief investment officer for private equity fund BlackRock Inc. (NYSE: BLK). Doll said earlier this week that the global economy has likely seen the worst of the worldwide financial crisis, and that developing economies are already emerging from recession.

“If, in fact, we have seen a bottom in markets and economies are going to recover, the emerging parts of the world will recover the most and the fastest,” Doll told Bloomberg News. “After all, their recessions were largely unwanted inventory build-up and not the credit bust in the Western world.”

Earlier this month, Doll said he believed the S&P 500 would fall from its current levels (which it had), and then rally to end the year at around 1,000 – for a gain of about 11%.

“Emerging markets, if they are going to do better than that, are going to do closer to 20%,” Doll said. “There are some that already have. Some have done better than that.”

A couple weeks before Doll’s vote of confidence, Mark Mobius, famed investor and head of Templeton Asset Management Ltd., said that emerging-market stocks are building a base to enter a bull market at the end of the year, Bloomberg reported.

“We are at the base-building period for the next bull market,” Mobius told Bloomberg while attending a conference in Indonesia. “What I see happening is perhaps this continuing till the end of the year, and then a breakout.”

Many of these emerging and developing economies are on the cusp of breaking out, but are being held back by the drought of others. The ultimate catalysts that set them loose will be falling interest rates and easing inflation, Mobius said.

In the first week of May, about $4 billion was pumped into emerging-market equity funds. It was the largest weekly inflow since December and the eighth-largest on record, MarketWatch reported. Most of that went into ETFs, and long-term positions at that.

Not coincidentally, the specific countries seeing the largest inflows are represented in Harvard’s portfolio. Brazil posted its second-largest weekly inflow on record. China, India and Russia also saw huge gains, MarketWatch reported.

Those four markets – Brazil, Russia, India and China – comprise the so-called “BRIC” economies of the world.

Emerging Market ETF Plays

How to capitalize on emerging markets reemergence from recession depends on your risk tolerance. And risk levels can vary by country and investment sector.

Carl Delfeld, head of global investment advisory firm Chartwell Partners, noted that while the U.S. financial sector is the chief culprit of the global financial crisis, some healthy-capital foreign banks are currently very nicely positioned because they didn’t get involved in the bad U.S. debt, and because they have the fastest-growing growing base of consumers in the fastest-growing markets.

And a good way to play this trend could be the soon-to-be available Global Shares Dow Jones Emerging Markets Financial Titans ETF, Delfeld writes in the May 25 issue of Forbes magazine. Of the fund’s top-10 holdings, four are China-based, three Brazil and two India.

More speculative investors might be interested in another new ETF, the WisdomTree Dreyfus Emerging Currency Fund (NYSE: CEW), a basket of 11 equally weighted emerging market currencies that are rebalanced every quarter.

The currencies in the fund are the Brazilian real, Mexican peso, Chilean peso, Israel shekel, Turkish lira, Polish zloty, Chinese yuan, South Korean won, Taiwan dollar, Indian rupee and the South African rand.

For more general plays on specific countries, Harvard’s list of new investments could be a good starting point.

Money Morning Contributing EditorHoracio Marquez recommended iShares MSCI Brazil Index (EWZ) in his popular “Buy, Sell or Hold” column last October. It’s also one of the five emerging market ETFs that Money Morning’s Martin Hutchinson recommended earlier this year. Others included iShares MSCI Chile Investable Index (ECH), iShares MSCI Taiwan Index (EWT) and iShares MSCI Singapore Index (EWS).

Source: Looking For the Next Global Profit Play? Take a Look at These Emerging Market ETFs

Its shareholders already love the company’s new Co-CEO, Sanjay Jha. Just hours after the announcement, shares jumped 11%. Sanjay Jha, former COO of Qualcomm (NADAQ:QCOM) and engineering genius who is now in charge of the troubled mobile phone business, will be the head of the new handset company when Motorola splits in two in Q3 of 2009.

But will Jha be able to pull it off? Industry analysts are skeptical. While acknowledging that he excelled in operations at Qualcomm, they fear that Jha doesn’t have the marketing know-how to create exciting new products and pull Motorola out of the mud.

So should you buy Motorola (NYSE:MOT)? It’s hard to say until Mr. Jha makes a decision in 3 months as to how to turn Motorola around.

Another play that you may want to consider if you’re interested in tech, would be South Korea’s LG Electronics (PINK:LGERF). LG handsets, already popular worldwide are closing in on Motorola’s market share and are quickly gaining popularity in the U.S., which is Motorola’s backyard. LG is anticipated to have record sales this fall and this is not limited to their mobile devices. Their premium products are expected to continue their strong sales pattern despite global economic slow down.

Buying LG stock directly is a bit tricky though and the stock isn’t cheap, averaging over $100 a share. It’s available on the Korea Stock Exchange, the London Stock Exchange, and the Luxembourg Stock Exchange, and as a tiny ADR on the pinksheets.

You can also buy an exchange-traded fund such as iShares MSCI South Korea Index Fund (NYSE:EWY), which includes LG Electronics.

Source: Has Motorola Seen The Worst?

That wiped out the gains from the June infusion of tax rebates and turned the key Personal Consumption Expenditure – which had risen a solid 0.6% in cash terms – into a feeble 0.2% drop in real terms.

It’s obvious that inflation is continuing its inexorable increase. It’s also obvious that the world’s monetary authorities – including the Federal Reserve – are going to have to get serious about this potentially ruinous trend.

For long-term investors, all of this leads to a single conclusion: It’s time to get prepared.

The policymaking Federal Open Market Committee meets today (Tuesday), and is expected to keep the Federal Funds target rate at its current level of 2.0%. Even if the FOMC surprises the market and raises the target to 2.25%, that would still leave short- term interest rates about 3% below the current (actual) level of inflation.

In short, this wasn’t a serious attempt to slay the inflationary dragon.

A real such attempt might, however, have a useful effect on global commodity prices. When you look at a graph of commodity prices over the past year, it becomes very clear that their vertical ascent was ignited at just about the time that Bernanke began cutting interest rates last September.

As the Federal Funds rate was cut from 5.25% to 2%, oil almost doubled in price and overall commodities prices shot up by about 40%. Since interest rates stopped dropping at the end of April, commodities prices have stabilized and indeed oil prices have backtracked from their record high of about $145 per barrel to about $120 per barrel.

Even the start of a monetary-tightening cycle would very likely cause a reversal in commodities markets, with speculators closing off their positions and prices dropping back toward their long-term-trend levels – even if the continued demand growth emanating from the emerging markets prevents them from dropping back all the way.

That, in turn, would be immensely helpful to the global economy; after all, even oil at a $100 a barrel – a level first reached in January, just months ago – still seems like a faint-and-withering dream.

High Inflation and Loose Monetary Policy

Of course, inflationary pressures and a need for tighter money are not exclusive to the United States. Even in Japan, which for a decade has worried about falling – not rising –prices, inflation has reached 2%. That’s above the 1.53% yield on Japan’s long-term government bonds, and is well above the Bank of Japan’s policy rate, which has been stuck at 0.5% for the last 18 months.

China and India both appear to have double-digit inflation – as well as interest rates well below the inflationary level.

China is not yet admitting its true level of inflation, since it wants to present a rosy picture for the Olympics, but the first statistics released after the Olympics conclude may be grim.

As for India, it is fighting inflation not by monetary means (The Reserve Bank’s interest rate is still only 8%, compared to inflation’s 12%), but by subsidizing the price of oil, food, and other basic goods. And those subsidies are causing the country’s budget deficit to spiral out of control – it almost equals 10% of India’s GDP.

In Europe, the European Central Bank (ECB) has made fighting inflation its top priority. At 4.1% in July, compared to the ECB’s policy interest rate of 4.25%, inflation is far above the ECB’s target of 2%. In Britain, the Retail Price Index (the one the government hasn’t fiddled with) is currently up 4.6% over the past year, although the Bank of England has managed to keep interest rates positive in real terms at 5%.

A few countries are fighting inflation vigorously. In Brazil, where retail price inflation is around 6%, the central bank interest rate is 13% – producing mouth-wateringly tight money that will allow the domestic economy to grow even after the commodities boom (from which Brazil generally benefits) has turned down.

However, countries with positive real interest rates, which allow them to fight inflation, are few and far between. At the other extreme, you have monetary basket cases like Dubai, where inflation is 22%, but you can get a home or a commercial real estate mortgage at a fixed rate of 7%. This has naturally led to a gigantic construction boom that could end cataclysmically.

Nevertheless, the global picture is clear. In the United States and worldwide, inflation is reaching levels at which policymakers are forced to pay attention. Their first steps will doubtless be inadequate, since rate-setters remain concerned about recessionary risks, and global interest rates will mostly remain negative in real terms. At some point, however, the gradual tightening of monetary policy will bring an end to the commodity price bubble.

Where to Be When the Fed Gets Serious

When policymakers finally start raising interest rates and the commodity cycle turns downward, stock markets will initially be adversely affected. The shares of oil companies and commodity producers will drop, and other shares will remain affected by the likelihood that higher interest rates will translate into lower profits. But there are two clear investment groups that are poised to benefit:

• First, to profit from rises in dollar interest rates, you might consider the Rydex Juno Fund (RYJCX), the price of which is inversely linked to T-bond prices (the fund shorts Treasury bond futures).

• Second, you should consider investing in countries that have few domestic energy and commodity resources, and that have been particularly hard hit by the price spikes as a result. Those would include Japan and Korea, both highly productive economies that are forced to rely on imports for most of their raw materials. In Japan, the iShares MSCI Japan Index ETF (EWJ) is currently trading at 16 times earnings, and features a yield of 1.6%, giving it a good market spread. In Korea, the iShares MSCI South Korea Index Fund ETF (EWY) trades at a lower Price/Earnings ratio of 12, though with a beefier yield of 1.9%

Source: What to do When the Federal Reserve Finally Gets Serious about Inflation

Light sweet curde oil futures on the Nymex fell $1.19 dollars to $143.30 dollars a barrel. The contract is down from $147.27 dollars on Friday.

What if oil drops even further? Say back down to the $100 mark. Justice Litle says smart investors should condsider Asian stocks and Asian ETFs… 

When thinking about a possible market scenario — an outcome, a turn of events, or what have you — always try to ask yourself, “cui bono?”

Here is my hunch: If crude registers a huge drop out of left field, the major benefactor will be Asia… which means Asian stocks and ETFs could skyrocket.

For example, check out the South Korea ETF chart below.

South Korea is representative of most all the Asia ETFs (Malaysia, China, Taiwan and so on). Asia as a region has been badly beat up this year by the high and rising price of oil.

Asia’s worries over $140 crude are at least threefold: The high cost of fuel contributes to local inflation (a serious problem); the cost of fuel subsidies takes a big bite out of government budgets; and the higher cost of transport (thanks to fuel again) cuts mercilessly into export profits.

Waiting for the Miracle

This all explains why South Korea is off by a third from last year’s highs. There is fear that the “Asian Miracle” could be derailed by too expensive oil.

The miracle won’t be stopped, in my opinion, even if the price of oil stays sky high. There is just too much dynamism, too much determination and too much at stake. Expensive crude just makes Asia’s road a little tougher, that’s all.

But again, here’s where “cui bono” comes in.

Because there is so much concern… because so many are wringing their hands over Asia’s high-priced-energy troubles… a big drop in the price of crude oil could turn depressed Asian markets into a coiled spring.

Or maybe think of it like a strong but struggling hiker, laboring to carry on with a backpack full of rocks. If crude falls sharply, the backpack suddenly gets lighter. Gloom lifts and a second wind returns.

So would I go short crude oil right now? Probably not. There could be some short-term money in it — perhaps with a limited-risk put options trade — but that move is just a little bit too cute for me.

I would, however, take a hard look at the Asian country ETFs. They’ve all been beaten like a red-headed stepchild by crude’s rise… they’re all very cheap in comparison to three or six months ago… and they could all see a massive resurgence if crude breaks open to the downside.

Source: What If the Price of Oil Implodes?