Checking In: One Of 2011's Top Rookie ETFs

It's that time of year again. No, we're not talking about Thanksgiving or Black Friday. We're talking about the time of year when it makes sense to start looking back on the scores of new exchange-traded products that have come to market this year.

Since that number is approaching 300, there are plenty of winners, plenty of so-so funds and plenty of duds. One of the clear winners is the WisdomTree Asia Local Debt ETF (NYSE: ALD), an ETF we highlighted several times since its debut in mid-March.

To say the WisdomTree Asia Local Debt ETF is off to a stellar start is an understatement. The ETF has raked in over $415 million in assets under management. By that metric, ALD is one of the best new ETFs of 2011, regardless of asset class (bonds, equities, etc.)

Perhaps you've noticed that in recent weeks that bond ETFs featuring debt denominated in local currencies rather than U.S. dollars have become quite popular. Well, ALD is one of the pioneers of that trend. The ETF is an Asia Pacific ex-Japan play on both developed and emerging markets sovereign debt.

Current constituent countries are South Korea, Malaysia, Indonesia, Philippines, Thailand, India, China, Hong Kong, Singapore, Taiwan, Australia and New Zealand.

Considering ALD is actively managed, its 0.55% expense ratio is fair. Beyond that, 0.55% is quite reasonable when considering how sharply ALD has outperformed the SPDR S&P 500 (NYSE: SPY) and the Vanguard MSCI Emerging Markets ETF (NYSE: VWO).

Only 28% of ALD's holdings are rated AAA, but that's not a bad thing at all. As more emerging markets see their credit ratings boosted, ETFs like ALD stand ready to deliver capital appreciation in a market where that's hard to come by.

Overall, the future looks quite bright for ALD. It has quickly become one of the best actively managed and foreign bond ETFs and could easily make the transition from great new ETF to just a great ETF in terms of AUM and performance.

Looking at the technicals, ALD's a buy above $51.50.

Bull case: Emerging market bonds remain attractive and credit ratings upgrades follow. Investors realize this is a more worthwhile asset class than U.S. Treasuries.

Bear case: Inflation grows in China and India, pressuring ALD in the process.