ETF Exposes Forgotten Part of Europe

NEW YORK (TheStreet) -- I've been critical of broad-based exchange traded funds such as the iShares MSCI EAFE Index Fund(EFA) for years. The reason is they mostly hold European companies that resemble those in the U.S. and forgo more vibrant economies.

Now there's a new fund, the GlobalX FTSE Nordic 30 ETF(GXF), that helps fill the gap. The Nordic area -- Sweden, Norway, Finland and Denmark -- is smaller than the big European Monetary Union countries of France, Germany and Spain, has fewer moving parts and uses its own currencies (except for Finland).

The Nordic 30 owns the largest 30 stocks from the four Nordic countries, measured by adjusted free float. Sweden has the largest market of the four, so the fund allocates 46% to that country, 20% to Denmark, 17% to Norway and 17% to Finland. Financial shares account for 28%, industrials 16% and technology 15%. Swedish bank Nordea(NDBAY) is the biggest position at just under 10% of the fund. Some other large holdings are Novo Nordisk(NVO), at 8.2% of the fund; Nokia(NOK), 7.3%; Ericsson(ERIC), 7.2%; and Statoil(STO), 7%.

A weighting of 10% or more in one stock is a risk factor. Nordea was down 60% at its worst. Still, the Financial Sector Select SPDR(XLF) dropped more than 80%. Sweden had its big banking crisis almost 20 years ago and, thus, the country's banks didn't take on as much risk as their U.S. peers.

The Nordic 30 ETF provides access to stocks that aren't in broad-based or regional funds. The largest Nordic stock in the popular iShares MSCI EAFE Index Fund is Nokia, with a 0.5% weight. The entire Nordic region comprises only 5.3% of the EAFE fund, which is heavy on Japan, the U.K., France and Germany -- all relatively bad places to invest in. Even in the Europe-centric WisdomTree Europe Total Dividend Fund(DEB), the Nordics account for only 8.1%.