European Investment Opportunities Outside the Euro Zone

Investors look beyond the zone’s heavy debt loads to non-euro nations with healthier balance sheets.

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Germany's five-year bond auction attracted bids for more than double the targeted amount Wednesday, supporting its status as the euro zone's safest haven. The German federal statistics office said the economy suffered a modest slowdown to 3 percent growth last year, from the 3.7 percent growth seen in 2010.

Some analysts expect tough sledding for Europe for now, and unforeseen downgrades and additional debt-market stress make predictions difficult. Low interest rates and other bailout efforts may begin to take hold later in 2012.

For U.S.-based investors, exchange-traded funds (ETFs) can be an efficient way to gain international investing exposure, although with risks. Here's a look at some leading ETFs that offer a play on non-euro Europe.

iShares MSCI United Kingdom Index Fund (EWU). With more than 100 securities in its mix, this fund has heavy exposure to energy, consumer staples, and financials. Top securities include Vodafone Group, HSBC, and BP. The fund has broadly outperformed the main proxy for euro-zone equity performance, iShares MSCI EMU Index Fund (EZU); EWU is down 9 percent over the past six months versus a 28 percent drop for EZU.

iShares MSCI Switzerland Index Fund (EWL). Three securities, Nestle, Novartis, and Roche Holdings make up close to 50 percent of this fund's total portfolio. Healthcare (30.9 percent), consumer staples (25.7 percent), and financials (17.3 percent) take up the top three spots, while energy and telecom take up the two smallest allocations in the fund. EWL is down 14.9 percent over the last six months.

Global X FTSE Norway 30 ETF (NORW). The fund tracks the FTSE Norway 30 Index and gives investors access to 30 of the largest firms that trade on the Oslo market. In terms of concentration, investors should note that energy dominates the portfolio, making up close to 40 percent of total assets, while financials (16.2 percent), and basic materials (12.2 percent) round out the top three. Clearly, the product is more tilted toward the commodity sectors than the others on the list and can be more exposed to global economic developments, Zacks notes.

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