A reader asked about the best way to capture a country for an investment portfolio.

Well sorry to disappoint but there can be no single best way. Depending on the country there could be a lot of funds, just one fund or no funds.

For countries that do have funds, the make up of the funds would have to be very relevant for deciding whether the fund is a good fit or not.

As an example, Sweden, pictured in this post, has an ETF that trades under ticker EWD. I have been favorably disposed to Sweden for quite a while and wrote about EWD in January 2006 for TSCM.

In that post, while generally positive on EWD, I expressed concern about its then 22% weight in Ericsson (ERIC). That concern came to matter last fall when ERIC plummeted and now the stock has only a 10% weight in the fund. For clients I have preferred an individual stock for Sweden than the ETF.

For clients where 40 stocks don't make sense, however, I have no problem using an ETF for Australia. Most clients own a stock but I don't hesitate with the ETF for accounts where ETFs are more appropriate.

Brazil is a little less clear to me. I have used a stock for exposure to Brazil in most instances but have never owned iShares Brazil (EWZ). Brazil is obviously thought of as a resources country but EWZ has a meaningful weight in bank stocks. Over the last year EWZ is up a lot but the weighting to financials, which have lagged the resource stocks, has caused EWZ to trail behind the the big NYSE, resource ADRs. For whatever reason I have always preferred one of the resource stocks for Brazil over anything that included financial stocks.

This contrasts or maybe contradicts that I use a bank stock to capture Chile. There is an ETF, which I think highly of and also a closed end fund. I think any of the three could be fine proxies, more so than with Brazil anyway. Clearly that is a subjective interpretation of the products and the countries.

As mentioned above there are countries for which there is no fund to serve as a proxy. For some folks no fund means no dice. This is where it becomes difficult but foregoing a country for lack of the fund is not ideal, IMO. Long time readers will know I have been a fan of Norway for a long time. I have had one stock for about three and a half years and two year sovereign debt since last spring and both have contributed significantly to returns in the time I've owned them.

Obviously an investor can only do what they are comfortable with and what allows them to sleep but that does not mean an investor should not learn more about something they are not comfortable with in order to perhaps reassess what they can do.