Asia has been at the forefront of economic growth in emerging markets. And some economists are expecting the region to provide more stable long-term prospects than even Latin America or developing Eastern Europe.

So it's not surprising that a second exchange-traded fund with a focus on emerging Asian countries has hit the market.

On Friday, Barclays Global Investors launched the iShares MSCI All Country Asia ex-Japan Index ETF (NasdaqGM: AAXJ).

At first glance, AAXJ looks a lot like the SPDR S&P Emerging Asia Pacific ETF (AMEX: GMF). Since coming out last March, the SPDR fund run by State Street Global Advisors has attracted $121.8 million in assets.

Both provide exposure to seven markets: China, Taiwan, Hong Kong, India, Thailand, Indonesia and Malaysia. AAXJ adds South Korea and Singapore into its mix, while GMF includes a smidgen of Pakistan.

But those are two key additions by AAXJ. Together, South Korea and Singapore account for nearly 28% of the underlying MSCI benchmark's constituents. The top countries by weight are quite different as a result. (See charts below.)

Each fund is well-diversified in terms of numbers of stocks as AAXJ has 218 different names in its portfolio and GMF holds 177. The new iShares also charges more in terms of expense ratios, 0.74% vs. 0.60% for GMF.

The new AAXJ is based on the MSCI All-Country Asia ex-Japan Index. It actually has about 559 constituents, meaning BGI's taking a sampling of that list to create the fund's portfolio.

Through June, the index had average annualized returns of 11.71% vs. the MSCI EAFE Index's 5.83%, according to BGI and MSCI.

Fine-tuning Emerging Markets 

While some pundits are high on Asia as a long-term growth leader in emerging markets, such geographically concentrated ETFs figure to offer more short-term risks than their diversified rivals. Indeed, SSgA's marketing of GMF refers to the fund as a means to fine-tune emerging markets allocations by pairing it with more broadly diversified funds.

In the short term, such advice might be well-noted considering that several markets represented in AAXJ and GMF are showing signs of cooling.

For example, Singapore late in July reported inflation rates that are at multi-decade highs. And Taiwan's economy, already slowing somewhat, is experiencing more downward pressure from rising prices.

A big exporter of consumer electronics, much of Taiwan's manufacturing sector is focused on highly competitive overseas markets. That has limited their ability to pass along rising raw materials and transportation costs.

But emerging Asia's longer-term story includes a lot of ties to the 800-pound gorilla in the group, China. Not surprisingly, AAXJ's index has its biggest weighting to that country. In fact, nearly 74% of its components came from four markets—China, South Korea, Taiwan and Hong Kong.

In such a big exporting region of the world, sector weightings could also be key to understanding how AAXJ and GMF will react to changing market conditions. Three sectors—Financials, Tech and Industrials—make up nearly 60% of AAXJ's benchmark weightings. If you add Telecom into the Tech mix, that takes it up to almost 70% of the total.

With GMF, the same picture emerges. In this case, a trio of sectors—Tech, Financials and Energy—dominate (in that order). Together, they also comprise 60% of the underlying index's constituents. Again, combining Telecom with Tech pushes that to around 70% of the ETF's total.

AAXJ Breakdown

Source: BGI, MSCI (as of June 30)

GMF Breakdown

Source: State Street Global Advisors (August 14)