Peru's Pleasant Surprise

When it comes to GDP growth estimates and reported figures, emerging markets have disappointed as a group in 2012. China's growth rate of 7.6 percent in the second quarter was viewed as not enough by those that have become accustomed growth in excess of eight percent. That was China's lowest GDP in three years. Estimates for 2012 Brazilian GDP growth are now pegged at 1.73 percent

. Economists are expecting growth of four percent next year, but neither the 2012 nor the 2013 number are what investors expect from a developing nation. India's GDP grew at just 5.3 percent in the first quarter, well below the country's previously lofty precedent. Worse yet, the second-quarter number is expected to match the first quarter's, confirming investors' fears that Asia's third-largest economy is slowing. Not all developing nations are disappointing on the economic growth front. Peru, one of the world's largest producers of copper, gold and silver, is a prime example of an emerging market that is providing pleasant surprises. In seasonally adjusted annualized terms, GDP growth accelerated to 7.4 percent in the second quarter from 7 percent in the first quarter,

. On a year-over-year basis, the second-quarter number jumped 6.1 percent. Perhaps the only disappointment is that the iShares MSCI All Peru Capped Index Fund

declined following the news. Wednesday's 0.4 percent drop for EPU means the fund has now lost 7.1 percent over the past six months. EPU's 6.2 percent year-to-date gain means the SPDR S&P 500

has offered double the returns without the emerging markets risk.

EPU, which has $332.7 million in assets under management, started 2012 with a bang. In January, the ETF was trading around $38. By April, the fund was flirting with $47, but as investors eschewed risk and the commodities trade was turned off, EPU faltered to fall below $40 earlier this month. EPU's recent weakness arguably belies the

. Traders that are familiar with Peru could argue the second-quarter GDP number is not a surprise. After all, Peru

. Peru also provided investors with another surprise this month. After Fitch Ratings and Standard & Poor's moved Peru's credit rating

, S&P raised its outlook on Peru's debt to positive from stable earlier this week. That move indicates there are some perks for investors that invest in countries with debt-to-GDP ratios of just 24.3 percent.

Unlike so many other emerging markets ETFs, EPU is not dominated by bank stocks, though financials loom large with an allocation of 24.2 percent. Not surprisingly, materials account for almost 53 percent of EPU's, meaning two high-beta sectors represent over 77 percent of EPU's weight. EPU's beta compared to the S&P 500 is just 1.23,

, but the high concentration in materials and bank names might be enough to make skittish investors think twice about this ETF. There are other options investors can consider for getting involved with Peru and its surging economic growth. The Global X FTSE Andean 40 ETF

offers combination exposure to Chile, Colombia and Peru with Peru accounting for 24 percent of the fund's weight. AND has gained nearly 10 percent this year. The fund does not skimp on materials and banks as those groups combine for over 39 percent of the ETF's weight. It is worth noting that AND has a conservative tinge to it as utilities and staples combine for over 30 percent of the ETF's sector weight. Accessing Peruvian sovereign debt, a worthwhile asset class amid the improve outlook on the country's debt, is a little trickier. The PowerShares Emerging Markets Sovereign Debt ETF

, the Market Vectors LatAm Aggregate Bond ETF

and the WisdomTree Emerging Markets Local Debt Fund

, among others, offer exposure to Peruvian sovereigns, but none of those funds allocate even five percent to the country. EPU remains the only pure-play ETF option for accessing Peru, but despite its decline, that is not a bad thing. The fund's beta and price-to-earnings ratio are both lower than the iShares MSCI Emerging Markets Index Fund. Perhaps that is a sign investors can achieve higher returns with less risk with EPU than the broader emerging markets universe. For more on emerging markets ETFs, click

.