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NEW YORK (TheStreet) -- I've been critical of broad-based exchange traded funds such as the iShares MSCI EAFE Index Fund (EFA) - Get iShares MSCI EAFE ETF Report 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) - Get Glbl X FTSE Nrdc Reg ETF Report

, 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) - Get Novo Nordisk A/S Report

, at 8.2% of the fund;

Nokia

(NOK) - Get Nokia Oyj Report

, 7.3%;

Ericsson

TheStreet Recommends

(ERIC) - Get Telefonaktiebolaget LM Ericsson Report

, 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) - Get Financial Select Sector SPDR Fund Report

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%.

The simplicity of Nordic markets has contributed to their outperformance. According to data compiled by IndexUniverse.com, the methodology that underlies the Nordic 30 ETF has averaged an annualized return of negative 2% versus negative 6.2% for the S&P 500. It also outperformed the EAFE Index fund, which has dropped 5.6% over three years, according to ETFConnect. The five-year numbers show the Nordic 30 up 9.2% on an annualized basis, S&P 500 down 0.1% and the EAFE Index fund up 4.7%.

The Nordic ETF could be a tool for foreign developed markets. The EAFE Index fund will continue to be an inferior way to access international markets. Developed markets that I most want to own are the Nordics, Australia and Canada. (Israel has a lot going for it but some index providers still think of it as an emerging market.)

An investor looking to target 30% in foreign developed markets could allocate 15% to the Nordic 30, 8% to

iShares MSCI Australia Index Fund

(EWA) - Get iShares MSCI Australia ETF Report

and 7% to

iShares MSCI Canada Index Fund

(EWC) - Get iShares MSCI Canada ETF Report

. Each country weight is modest at less than 10%. The big caveat is the weighting to financial stocks. As mentioned above, the Nordic 30 is 28% financials, compared with 41% for iShares Australia and 31% for iShares Canada. This would require underweighting financials in the domestic portion of the portfolio, which, given the fundamental state of the industry domestically, should be easy to do.

At the time of publication, EWA was a client and personal holding.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback;

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