Middle East ETFs Head-To-Head: GULF vs. MES

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After the Dubai debt crisis late last year, many investors feared that the Gulf boom was quickly coming to an end. But obituaries written for the Gulf economy turned out to be premature, as Gulf States such as the UAE, Qatar, and Bahrain have bounced back from that scare to post solid returns in 2010. Although Dubai continues to struggle as it flushes out the excesses of its property boom, neighbor Abu Dhabi is expected to grow its GDP by 3.8% this year, while Qatar is expected to have a world best 19.2% GDP growth in 2010. These forecasts have been boosted by increased oil prices, which have more than doubled from their lows last April. The soaring price of oil has helped to fuel the economies of the Gulf region while Qatar looks to benefit from expanded production of its vast natural gas reserves which could stimulate the region for years to come. But the improved economic outlook is also attributable to strength in domestic demand and non-energy sectors of the economy.Currently, there are two primary ETF options available to investors seeking exposure to this area of the world: the Market Vectors Gulf States Index ETF (MES) and the WisdomTree Middle East Dividend ETF (GULF). Below we highlight the main differences between these two ETFs, including comparisons of country exposure, expenses, and risk profile. While MES and GULF are similar in many ways, there are some nuances that may make one more appropriate for certain investors than the other (see more head-to-head ETF comparisons here).