Let 2006 go down as the year that diversity finally came to the achingly bland Canadian ETF market.

Not a lot of diversity, mind you. We now have 27 exchanged-traded funds listed on the Toronto Stock Exchange, compared with about 350 in the United States and dozens more to come. But with the introduction of nine new ETFs in the past couple of months, things are looking up for Canadian investors who like the low cost and flexibility of these index funds that trade like a stock.

Want corporate bonds to juice up the yield from your fixed-income holdings? Then take a look at the new iShares Cdn Corporate Bond Index Fund. Want to emphasize a value approach in your Canadian stock market exposure? Try the iShares Cdn Value Index Fund. Hot for oil sands stocks? Then there’s the Claymore Oil Sands Sector ETF.

It’s at a point now where you can honestly say that it’s possible to build a fully diversified portfolio using ETFs exclusively in Canada, said John De Goey, an investment adviser at Burgeonvest Securities who uses ETFs in client portfolios. I don’t think you could have said that two months ago.

The choice of ETFs available to Canadian investors should be even larger within weeks thanks to the entry of a new player, Horizons BetaPro. This firm has already introduced a line of mutual funds that allows investors to profit from ups and, more importantly, downs in major stock indexes, commodities and currencies. Now, the franchise is being extended into a pair of ETFs that will provide a way to take both a bullish and bearish stance on the S&P/TSX 60 index.

If you don’t mind bushwhacking your way through the ETF jungle in the United States, you can easily buy any ETF listed on the American or New York stock exchanges through a full-service or discount brokerage. Just remember that there are multiple choices in many ETF categories, and a surfeit of gimmicky new stuff that offers exposure to areas like public offerings, stocks that corporate insiders are buying, alternative energy and clean technology stocks and nanotechnology. Canada’s newly enhanced selection of Canadian ETFs offers a simple, viable alternative.

A new product that interests Mr. De Goey is the Claymore BRIC ETF, which invests in the shares of companies from Brazil, Russia, Indian and China that are listed for trading on U.S. exchanges. Previously, he used a U.S. ETF for exposure to emerging market stocks like these — the iShares MSCI Emerging Markets Fund.

The benefit of the BRIC fund is that it uses currency hedging to limit the impact the moves in the Canadian dollar would have on returns on the stocks it holds. Hedging usually makes an ETF a little more expensive to own, but the Claymore BRIC fund’s 0.6-per-cent MER undercuts the 0.75 per cent charged by the iShares fund. Note that the BRIC fund is less diversified than the iShares ETF, although it does cover what are arguably the four most dynamic emerging market economies.

Adrian Mastracci, a Vancouver-based adviser who uses ETFs for his clients, said he’s interested in the new iShares Cdn Corporate Bond Index Fund, which tracks the Scotia Capital all-corporate bond index.

This product is one of three new bond ETF offerings from Barclays Global Investors, along with the iShares Cdn Government Bond Index Fund and Long Bond Index Fund. Out of the three, I would see the corporate bond fund as the top pick right now, just because that type of fund hasn’t been available much before and, to me, it looks like a convenient way to get a nice, round basket of corporate bonds, Mr. Mastracci said.

The corporate bond ETF’s management expense ratio is 0.4 per cent, which would leave it with a yield of 4.2 per cent or so right now. The government bond fund’s yield, factoring in an MER of 0.35 per cent, would be 3.85 per cent. The iShares family also includes a bond fund that covers the entire bond universe and offers a yield of about 4 per cent, after applying its MER of 0.3 per cent.