3 EM Style ETFs Your Broker Forgot to Mention

It is not a stretch to say that most ETF investors have at least heard of the Vanguard FTSE Emerging Markets ETF (NYSE:VWO) and the iShares MSCI Emerging Markets Index Fund (NYSE:EEM). Slack performances this year aside, EEM and VWO have proven popular with investors by providing easy access to a large number of developing world equities and to the marquee emerging markets.

VWO and EEM are the two largest emerging markets ETFs by assets. They are highly liquid, easy-to-understand funds and, in the case of VWO, quite inexpensive for investors to own. VWO has an expense ratio of just 0.18 percent, making it less expensive than 89 percent of comparable ETFs, according to Vanguard data.

Again, EEM and VWO are straight-forward and traditional in their approach. Investors can expect the largest emerging markets firms by market value, such as Petrobras (NYSE:PBR) and Taiwan Semiconductor (NYSE:TSM), to be on prominent display in these ETFs as well as familiar countries such as Brazil and China to carry significant weights.

There are alternatives to that traditional way of doing emerging markets ETF business, including the following unheralded funds.

PowerShares FTSE RAFI Emerging Markets Portfolio (NYSE:PXH) The PowerShares FTSE RAFI Emerging Markets Portfolio may not grab a lot of headlines, but this is not a small ETF (over $386 million in assets under management). PXH tracks the FTSE RAFI Emerging Markets Index, which parses through the largest emerging markets stocks to find the best based on book value, cash flow, sales and dividends. Those with the highest fundamental scores receive the largest weights in the fund, though no stock accounts for more than 3.76 percent of PXH's weight.

Since PXH focuses on large caps, it does include many of the same names investors will find in EEM and VWO, such as Petrobras, Taiwan Semiconductor and Chinese bank stocks. PXH does features an almost 11 percent weight to Russia, which is larger than many diversified emerging markets ETFs. However, that may be because according to PowerShares data. EEM's P/E is over 18 and its price-to-book ratio is three.

First Trust Emerging Markets AlphaDEX Fund (NYSE:FEM) The First Trust Emerging Markets AlphaDEX Fund debuted in April 2011 and initially struggled to attract assets. Fast-forward two years and this ETF is more than viable with an AUM total of nearly $170 million.

More importantly, FEM offers a unique approach that has recently lead to superior returns. As the other AlphaDEX ETFs do, FEM uses growth factors such as price appreciation and value factors such as return on assets to screen its constituents.

The result is a lineup of 151 stocks, most of which are not found among the top holdings of traditional emerging markets ETFs. That has worked in FEM's favor as the fund has surged over 15 percent in the past six months, easily outpacing some of its more popular rivals along the way. FEM is pricier by expense ratio (0.80 percent), but compelling on valuation with a P/E just 9.14.

iShares MSCI Emerging Markets Growth Index Fund (NYSE:EGRW) The iShares MSCI Emerging Markets Growth Index Fund is by far the smallest ETF on this list (just $2.8 million in AUM) and average daily volume of less than 600 shares per day is apt to chase some investors away.

Those factors do not mean EGRW should be altogether ignored. EGRW is a credible alternative for those looking for a "growthier" fell to EEM because the former's index is merely the growth the stock equivalents of the index tracked by EEM. Country weights are comparable as EGRW is dominated by China, South Korea and Brazil.

At the moment, EGRW can be viewed as a dichotomy. A gain of almost 11 percent over the past six months is impressive compared to EEM and VWO. However, EGRW has had tracking error of 0.92 percent since its February debut, according to iShares data. That is toward the high end of what investors want to see with ETFs.

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