Calls of an Arab Winter Not Hurting Middle East ETFs...Yet

Last year, it was the Arab Spring that roiled the politically volatile Middle East. This is year, the seasonal phrase has turned to Arab Winter as anti-Western protests have spread across the region. Last week, U.S. Ambassador to Libya Chris Stevens was killed and his consulate burned during protests in Benghazi.

The CIA believes the calamity in Benghazi was sparked by protests in Cairo. Backlash against the film "Innocence of Muslims" has led to tumult throughout the Arab world and prompted the U.S. State Department to evacuate non-esssential personnel from embassies in Sudan and Tunisia last weekend.

However, even as the anti-U.S. protests have escalated and spread to Southeast Asia, a curious phenomenon has emerged. That being the resilience of ETFs with heavy exposure to the Middle East. On Monday, a day that when any heat map showed a sea of red for emerging markets funds, Middle East ETFs were not just holding up; they were going up.

Take the example of the Market Vectors Egypt Index ETF (NYSE:EGPT), the lone ETF exclusively devoted to the North African nation. Discarded like yesterday's newspaper following the Arab Spring and the overthrow of the Mubarak regime, EGPT has come roaring back to be one of this year's best-performing country-specific ETFs.

Moreover, the ETF is showing a penchant for performing well in the face of adversity. EGPT rose on strong volume last Tuesday when the Cairo protests turned vicious. On Monday, the ETF added another 1.9 percent on volume that was nearly triple the daily average.

Not only is EGPT's share price rising, but so is its assets under management tally. The ETF had $51.6 million in AUM as of the end of August, $54.8 million as of the close of markets on September 10 and $60.6 million a week later. EGPT will not be confused with the Vanguard MSCI Emerging Markets ETF (NYSE:VWO), but the asset gains on a percentage basis and in the face of political uncertainty are undoubtedly impressive.

The WisdomTree Middle East Dividend Fund (NASDAQ:GULF) is another fund that is proving sturdy despite regional calamity. Interestingly the ETF did not trade on Monday, but in the previous five trading days, GULF tacked on two percent. Over the past month, the ETF gained 4.3 percent.

GULF, which has a 30-day SEC-yield of 4.7 percent, is heavily allocated to less volatile Middle East locales. United Arab Emirates, Qatar and Kuwait combine for 75 percent of the fund's weight. Still, this is an ETF with "Middle East" in its name that devotes 22 percent of its combined weight to Egypt, Morocco and Oman. Volume in GULF may not be jaw-dropping, but the ETF is fighting off the guilt by association issue that often afflicts the Middle East when just a few of its nations are generating negative press.

Speaking of low volume, that is what the PowerShares MENA Frontier Countries Portfolio (NASDAQ:PMNA) is afflicted with, but the ETF did trade on Monday and gained 0.7 percent in the process. Over the past five days, PMNA has climbed 2.7 percent.

PMNA, itself a decent yielder with a 30-day SEC yield of nearly 3.6 percent, devotes over 22 percent of its weight to Egypt. Usually, that would not be a good thing in an environment of elevated political drama. Recently, that has not been the case as PMNA has quietly gained 3.5 percent in the past month.

The Market Vectors Africa ETF (NYSE:AFK), which is a diverse play on that continent, has performed nicely, indicating that it is not being hampered by a combined 31 percent allocation to Egypt and Morocco. AFK is likely being buoyed by a 24 percent weight to South Africa and a 15.3 allocation to Great Britain. AFK traded lower on Monday, but the fund is still up almost three percent in the past week.

Perhaps the most impressive performance of all Middle East-related ETFs is the iShares MSCI Israel Capped Investable Market Index Fund (NYSE:EIS). Israel, long the most dependable U.S. ally in the region, is what one might call a "guilt by geography" play. Israel is home to an advanced, developed economy, but the corner of the globe it occupies makes its equity market vulnerable to political discontent in the region.

EIS at best has been a mediocre performer in 2012, but the ETF is showing signs of turning things around. Up 4.5 percent in the past month and 3.3 percent in the past week, the next big hurdle for EIS is reclaiming its 200-day moving average. That is about $1-off based on Monday's close.

EIS, which is home to just $71.8 million in AUM ($10 million below AFK), has been vulnerable to Middle East volatility in the past. There are no guarantees the current sturdiness will continue, but as the ETF tracking the area's steadiest nation, EIS does merit some consideration.

For more on Middle East ETFs, click here.