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Nigeria, Dubai, Iceland: All Better Bets Than US

Dubai, United Arab Emirates
Siegfried Layda | Image Bank | Getty Images
Dubai, United Arab Emirates

Investors who have done well buying U.S. stocks this year could be doing even better with Nigeria.

The Nigerian market, in fact, has outperformed American equities by a large margin, up more than 20 percent this year versus the U.S. gain of a still-respectable 6 percent.

Ditto for Dubai, Iceland, Vietnam and Abu Dhabi. Taken together, the countries form an unlikely quintet that leads the global equity markets and poses opportunities for investors wary of all the stomach-churning turmoil closer to home.

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"If you don't know something, you tend not to buy it. That's human nature," said Nadav Baum, executive vice president at BPU Investment Management in Pittsburgh.

"People know what Coke does. People understand what Heinz is," he added. "But when you're playing in those international markets, people get concerned about currency risk, they get concerned about liquidity, and they really don't understand the companies out there."

Of course, those are all valid points. One of the keys to investing is understanding where you're putting your money, and transparency isn't exactly all hallmark of many foreign exchanges.

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That's why exchange-traded funds can provide good access points for investors looking to get broad-based exposure to foreign markets without having to worry if, say, the market in Bulgaria (up 12 percent this year) or the Philippines (plus 15 percent) should blow up.

"The ETF route allows you to invest like an institution and that's a good thing," Baum said. "You don't have the time or expertise to monitor those securities that trade in the international markets. I like the baskets. That's a great way for the individual investor to get that exposure."

Baum uses two funds for his foreign exposure: the relatively new S&P Emerging Markets Dividend, which has been lackluster in price performance this year but yields 5.4 percent, and the iShares MSCI Pacific ex-Japan offering, which has outperformed its benchmark over time and is up 3.5 percent this year but has a 4 percent yield.

Another approach is to tap into so-called frontier markets that are covered in a handful of ETFs.

The iShares MSCI Frontier 100 Index has investments in countries such as Kuwait, Qatar—and, yes, Nigeria—among its top holdings. The fund is up nearly 6 percent year to date.

Overall, emerging and frontier markets are getting plenty of attention from strategists.

While equity flows have turned positive in 2013, far more money has gone to global markets than the U.S.

January saw global outpace domestic narrowly, but in February the gap has grown. Global equity mutual funds have taken in nearly $14 billion so far while U.S. funds have seen just $2.5 billion, according to the Investment Company Institute.

(Read More: ETFs vs Mutual Funds: The Debate Heats Up)

Wells Fargo recently advised investors to look to Vietnam, Myanmar, Cambodia and Laos as potentially attractive areas.

"The features suggesting potential opportunities for investors seem consistent with those of other emerging markets—young population, lush natural resources, and increasing trade volume with India and China," the firm said in an analysis.

The U.S. market is actually just about middle of the road when compared to others across the globe.

It ranks 29th of 77 global exchanges and third among G-7 countries, behind Japan and Britain, which have seen big pops in their stock markets as their respective currencies have tumbled in value, according to Bespoke Investment Group.

The world's worst-performing market is Brazil, down about 7.5 percent.

-By Jeff Cox, CNBC.com senior writer. Follow him on Twitter at @JeffCoxCNBCcom.