Looking at the top ten ETFs for this year so far, we see two groups that stand out. We see the country funds of China ( no surprise), Spain , Belgium and France all in the top ten performing funds so far this year. Perhaps one of the biggest surprises is the Spain (EWP) fund. This is a rather obscure fund that is under the radar. This fund has $159 million in assets while the Japan fund (EWJ) has $13.5 billion in assets.

Spain has strong economic gains and low interest rates. To keep everything in perspective, Europe as a whole is out performing the US markets. Spain is outperforming the rest of Europe. In Spain the first quarter gross domestic product grew 3.5%. Since inflation rates are still relatively low, this market has room to grow.

Another fund flying under the radar is the Belgium Fund (EWK). Belgium has a very low interest rate and the stock market is undervalued. This is another low volume ETF with the daily average volume around 67,000 shares.

One of the hottest Exchange Traded Funds continues to be a China Fund (FXI). This fund has grown almost 20% in the last two months. In the same time period the NASDAQ Trust is down 4% and the SPYDERS have been hovering around their 5% gain for the year. The US markets are just not moving.

The FXI is an excellent way to invest in the China markets. The top two holdings in this fund are China Mobile and PetroChina. This economy is poised to move more then the US economy in the next year.

The other group that stands out when we look at the top ten ETFs for 2006, is real estate related Exchange Traded Funds. The news is filled with doom and gloom about the residential real estate market, however, the real estate related ETFs tend to focus on commercial real estate. The fund leading the pack so far this year is iShares Cohen & Steers Realty Majors (ICF).

These funds tend to invest is things like shopping centers, office parks and shopping centers. Also the investments tend to be in commercial real estate over a large and diverse geographical area. In this way the fund is protected against a downturn in one geographical region. These exchange traded funds are tied more to the US economy as a whole then residential real estate. They are not immune to downturns, however they are a good choice because they are less vulnerable then the over inflated housing markets.

The commercial real estate market continues to outperform most of the other sectors. One factor is a stagnant supply along with a growing demand. This is a much different situation then the residential real estate market. This is leading to rising rents and rising revenue growth for commercial real estate owners.

The outlook for real estate REITs continues to be good. The fundamentals of the commercial market remain strong, and as long as the interest rates remain low, the conditions for REITs look positive.

In the world of Exchange Traded Funds there are also foreign REITs. The markets that look good are in Europe and Asia. The market in Hong Kong looks particularly strong.

In the domestic markets the hotel sector is looking particularly attractive. This is due to a healthy increase in revenue per room.

The lesson is to learn the markets. With all the negative press on the real estate market, many uninformed investors will be directed away from looking at REITs as a good investment. It is important that investors become more informed. As investors have choices they never had before because of the growing diversity of Exchange Traded Funds, the investors have a responsibility to be informed on specifics of markets that they may have not had to pay attention to in the past. There are opportunities there, however the investor will have to work hard to make the correct decisions.

As summer ends the trading volumes will pick up. Always keep an eye on the commodity related exchange traded funds. Even though they all seem quiet now, they can change quickly.