Recent concerns with the Portuguese economy have highlighted the work that still needs to be done in Europe. Much uncertainty still plagues the continent. However, as investors fixate on the PIIGS nations within Europe and their ongoing debt struggle, many bright spots are being ignored. Both Germany and Switzerland get high marks for their export driven economies and funds such as the iShares MSCI Switzerland Index (NYSE:EWL) have become popular destinations to add exposure to the countries. However, other opportunities do exist in Europe and one may offer some of the best returns around.
IN PICTURES: 10 Reasons To Add ETFs To Your Portfolio

An Emerging Star
An economic powerhouse is right under the noses of most investors. Poland was the only European Union member not to fall into recession in 2009. Its economic growth rate in 2009 was the highest out of any of the OECD's 34 members. In 2010, the nation saw its economy grow by 3.7 percent. Poland's expansion has been fueled by its independent floating currency, the zloty. Its currency has fallen about 18% against the euro since early 2009. This has kept Polish exports competitive in the global marketplace and has helped insulate the nation from the effects of the Euro debt crisis. Analysts at the World Bank predict that Poland will finish 2011 with 4.1% GDP growth and 2012 with 4.5 percent. (To learn more about the Euro, see When and why did the euro make its debut as a currency?)

The nation also features favorable debt conditions. Public debt at the end of 2010, reached 53% of GDP. This compares positively with 77% for Germany, 62% in the UK & the nearly 94% for the United States. Corporate debt is low and average Tier 1 bank ratios in Poland are 11%-12% compared to less than 8% in Western Europe.

Playing Europe Through Poland
Additionally, Poland is a back-door play on the strongest in the Euro monetary union. Nearly 25% of Poland's exported goods are sold to Germany. Germany's finished products, which are popular around the world, are often made with components supplied from Poland. The nation is also viewed as a source of cheaper labor in Europe, with a wide range of companies such as ABB Limited (NYSE:ABB) and Dell (Nasdaq:DELL) setting up shop in the country.

Poland has also benefited from increasing domestic demand. Generous tax cuts and substantial infrastructure spending are helping spur this growth. Commercial property prices in the nation's capital of Warsaw are rising about 10% annually and foreign direct investment grew by 28% in 2010.

Adding Exposure
For investors looking to add exposure to Polish companies, there are only a few that trade on U.S exchanges, such as spirit producer/distributor Central European Distribution (Nasdaq:CEDC). However, opportunities do exist in the exchange traded fund sector.

In just under a year, Poland went from having zero ETFs that tracked the nation to having two. The Market Vectors Poland ETF (Nasdaq:PLND) and the iShares MSCI Poland Index (Nasdaq:EPOL) both provide access to Eastern European nation. However, long term investors may want to go with the iShares fund. The ETF tracks more than double the amount of holdings of the Market Vectors fund and also has a lower expense ratio of 0.61%. Both funds have financials as a top weighting with over 40% of EPOL in that sector.

For investors wanting to add all of Eastern Europe to a portfolio, both the iShares MSCI Emerging Markets Eastern Europe (NYSE:ESR) and SPDR S&P Emerging Europe (NYSE:GUR) include Poland as their second largest nation weighting, behind Russia.

Bottom Line
While much of Europe is still mired in crisis, Poland stands out as a prospect for portfolios. Its strong current growth prospects and good outlook makes the nation an ideal candidate for a portfolio weighting. Longer term investors may want to add the nation either through one of its single country exchange traded funds or through the Guggenheim Frontier Markets ETF(NYSE:FRN).

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