IShares' Bellwether ETF Beaten by Upstart

NEW YORK (TheStreet) -- Six months ago, I wrote favorably about the new GlobalX FTSE Nordic 30 ETF(GXF).

My thesis was simple: I believed (and still do) that using an ETF such as iShares MSCI EAFE Index Fund(EFA) is a poor way to access foreign markets because of its heavy weighting to Japan and the large countries in Western Europe. The iShares MSCI EAFE Index Fund is an investor favorite. It has $34 billion in assets. The GlobalX FTSE Nordic 30 ETF has a little more than $5 million.

There was plenty of evidence early on that countries in Europe and the U.K. were in as much trouble as the U.S. That being the case, the iShares EAFE Fund should have been seen as especially vulnerable. The U.K. comprises 21% of the ETF, followed by France, at 10%. Germany weighs in at 7.6%. Japan, whose prospects have dimmed, represents 22% of the ETF.

France and Germany aren't in trouble but may be hurt by the troubles of other countries, most notably the so-called PIGS, which are Portugal, Ireland, Greece and Spain. On the front burner is Greece's debt load. Debt is also a problem for Portugal, Spain and the U.K. At the time of this writing, there was no concrete plan for helping Greece, but if that country receives support, what about the other struggling nations?

The realistic outcome is not some sort of blowup resulting in social unrest and martial law. World-lagging returns that have plagued the region, along with Japan, mean that the iShares MSCI EAFE Fund will continue to be a poor proxy for foreign investing.

Instead of investing in this troubled region or currency, the euro, it makes sense to avoid the area at greatest risk and seek out less systemic risk, which is what the GlobalX FTSE Nordic 30 ETF does. It allocates 45% to Sweden, 19% to Norway, 18% to Denmark and 17% to Finland. The first three have their own currency, while Finland is part of the European Monetary Union. Norway is a surplus country, and the other three have debt burdens that are just a fraction of countries hobbled by debt.