Therefore, investors with a short-term bullish outlook on Europe and an appetite for risk can continue to play the riskier countries on the continent, such as EWI or EWP, while those who want to play a steadier long-term recovery can use a fund such as EWG.

Among the steadier recovery options in Europe is also Switzerland. The country is outside of the euro common currency zone and has therefore been able to dodge the currency-effect that has dragged down the euro-zone country funds.

In comparison to EWG, iShares MSCI Switzerland Index ( EWL) has fallen less in the past three months and has also seen a slightly better recovery in the past month.

EWL is a good bet on Europe for those who have confidence in European equities, but believe that the euro will continue to be under pressure against the U.S. dollar. Whereas the eurozone equities will have the headwind of the weak euro, the Swiss equities are priced in Swiss francs.

Investors should realize that being outside of the euro zone is not a guaranteed recipe for success. For instance, the United Kingdom faces fiscal concerns of its own, and although the pound is gaining traction against the U.S. dollar, it hasn't been enough to help the beleaguered iShares MSCI United Kingdom Index ( EWU).

Unlike most European country-specific funds, EWU is still in negative territory for the past month.

To conclude, with fear taking hold of markets on many days, and the focus of this being the financial health of countries and how it will affect the global recovery, investors in Europe should focus on the most financially healthy countries for a long-term strategy.

Although the countries that have had the worst problems in the markets are now seeing the best short-term runs in Europe, austerity measures and sluggish economies will ultimately eat into the long-term gains for markets there.

Investors looking for quick gains can play this short-term strategy with funds such as EWP, EWO or EWI, while a more sound strategy for a long-term improvement in economic sentiment in Europe would be to use a fund like EWL or EWG.

Finally, investors should pay attention to the stress test data that will be coming out of Europe this month to see if any country besides Germany has a strong banking sector.

-- Written by Don Dion in Williamstown, Mass.
Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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