To answer the original poster's question, yes, ELT's should function when submerged, and many function because they're submerged.
While 121.5 was the VHF frequency established internationally, it's now 406 MHz, with many broadcasting on both. Many ELT units establish a voice position relaying the lat long, and identification of the indivudal radio station.
Portable ELT's, often attached to life rafts and emergency equipment, are often referred to as EPIRBS; Emergency Position Indicating Radio Beacons, rather than ELT's (Emergency Locator Transmitters).
Some ELT's today also come with voice transmission capability as well as simply a beacon.