At a time when oil prices have plunged, why invest in the world’s biggest oil-exporting country? On June 15, Saudi Arabia will open its $530 billion stock market, the largest in the Arab world, to foreign investors for the first time. Only large institutions will be allowed to invest directly, but individuals will be able to gain exposure through ­exchange-traded funds (ETFs) that will track an index of the 169 companies listed on the Saudi ­exchange—the Tadawul. Although this is not an investment for everyone, it’s an opportunity for ­aggressive investors to bet on a wealthy emerging-market economy with fast-growing ­companies.

While social, religious and military clashes continue to roil the Middle East, they haven’t stopped the Tadawul from outperforming other emerging markets. It produced a total return of 43% over the past five years versus 18% for the MSCI Emerging Markets Index, and it is up 18% in 2015 through April 30 versus 10% for the index. Reason: The Tadawul doesn’t depend on high oil prices. Energy-related companies make up just one-third of the exchange’s total value. The rest are financial-services and consumer-­oriented companies such as Al Rajhi, the world’s largest Islamic bank, and Saudi Telecom. These are likely to see continued strong earnings because the Saudi government is using its massive fiscal reserves to diversify the economy, pouring hundreds of billions of dollars into infrastructure projects.

The most attractive way to invest: Three similar ETFs are expected to launch this year. They are Global X MSCI Saudi Arabia ETF…iShares MSCI Saudi Arabia Capped ETF (no stock in this ETF can exceed 25% of the portfolio)…and Market Vectors Saudi Arabia ETF. You may want to select the one with the ­lowest expense ratio.

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