The financial issues hitting Greece over the last year are not a surprise to anyone who follows the market or opens a newspaper. The big question looming over the Mediterranean country is whether or not it will remain in the European Union (EU) or pull out and go back to the Drachma.

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The action in the Global X FTSE Greece 20 ETF (ARCA:GREK) has suggesting the country will default on their obligations and secede from the EU. The ETF is down 26% in 2012 and trading at the lowest level of its short life. The two largest stocks in the ETF make up 32% of the entire allocation and both have been hit hard in 2012. Both stocks are traded on the New York Stock Exchange as ADRs and are available for U.S. investors to purchase.

SEE: ADR Basics: What Is An ADR?

Coca-Cola Hellenic (NYSE:CCH) is an Athens-based bottler of Coca-Cola products primarily for European distribution. The stock is down 11% in 2012, but has lost two-thirds of its value since hitting a high in 2008. The second largest holding is the National Bank of Greece (NYSE:NBG), which has gotten lots of media attention in the last year. The stock is down 14% in 2012 and has lost 98% of its value from a 2007 high. With the stock trading at just over $1 per share, the market is pricing in a potential bankruptcy, or something similar, for the bank.

One of Greece's close neighbors, Turkey, not a member of the EU at this time, though there have been discussions of adding the country in the future. The iShares MSCI Turkey Investable ETF (ARCA:TUR) has been one of the few bright spots in Europe in 2012, posting a gain of 7%. The country is a growth play, considering the stagnant to negative growth for most of Europe. The IMF recently raised its forecast for the country's GDP growth in 2012 to 2.3% and a jump to 3.2% in 2012. This is on top of robust growth of 8.3% in 2011.

SEE: An Introduction To The International Monetary Fund

The ETF is heavily invested in the financials (43%), which is not a big surprise for an emerging country that has above average growth. The 12-month trailing P/E ratio of nine is attractive, considering the growth potential for the country. The annual expense ratio on the ETF is 0.59% and it has a yield of 0.80%.

Eastern Europe
Investors who are interested in the region surrounding Greece could consider the iShares MSCI Emerging Markets Eastern Europe ETF (ARCA:ESR). The ETF has a large stake in Russia (76%) and Poland (16%) and therefore is not truly representative of the region. The ETF is down 6% year-to-date, falling in the middle of Greece and Turkey's performance. The only investors that should consider ESR are those that are looking to gain exposure to Russia specifically due to the large weighting.

SEE: An Inside Look At ETF Construction

The Bottom Line
Based on the risk associated with Greece and the surrounding region, and the potential reward for the countries, the best bet of the group has to be Turkey. The country has growth as its peers are struggling, and for now the non-association with the EU is a good thing. But, in the future an addition to the EU could be a boost to the country's economy. Keep in mind that its association with Europe can have an affect on the performance of the economy and the ETF going forward. With potential gains comes above-average risk.

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At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.

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