What do the disastrous oil spill in the Gulf of Mexico and the European sovereign-debt crisis have in common?

Quite a bit, it turns out.

I don't directly own shares in BP or any European financial institutions, and I've been avoiding both while following the depressing news about the environmental disaster in the Gulf and the latest permutations of the European debt crisis, which last week segued to Hungary.

No doubt plenty of investors are 'playing' the oil spill by speculating in BP shares. I just don't have the appetite for it. Even if I could make a strong case for the stock and turned out to be right, I'd take scant satisfaction from making money from this kind of disaster. While some will no doubt label this sentiment misguided, it's my investment, and I want to feel good about it.

I've been avoiding European bank stocks for another reason: Who knows where the exposure to shaky sovereign debt really lies? Until Europe follows the U.S. lead and imposes credible stress tests on its banks, I don't feel comfortable owning European bank stocks.

Nonetheless, the sharp decline of the euro and the plunge in many European stock prices last week got me thinking that there may well be some bargains to be found among Old World companies, especially major exporters that can take advantage of the weak euro.

I do own a broad-based European exchange-traded fund -- the BLDRS Europe 100 ADR Index Fund -- which has dropped recently in line with European markets. I bought it for broad-based exposure to developed Europe, part of what I consider a prudent diversification strategy. I'd never really examined the actual securities in the fund, so I decided to see just what was in it.

You can imagine my dismay when I discovered that its biggest holding is a European bank -- HSBC Holdings -- and its second biggest is BP. Spain's Banco Santander is also in its top 10 holdings, and financial companies make up 21% of the portfolio. So much for my illusion that I owned no BP or European banks.

I see no point in selling the fund now, with BP shares already so beaten down that the company is being discussed as a takeover candidate. But I don't want to add to it either, given my interest in exporters rather than banks and energy companies.

But when I looked at broad-based European alternatives, I discovered that they all had big positions in BP and European banks. This isn't surprising, since they all track various European indexes in which large oil companies like BP and large banks like HSBC are heavily represented.

Next I turned to mutual funds, but there, too, it's hard to find one that doesn't own major financial institutions or BP. For example, the popular Fidelity Europe Fund's top three holdings (as of March 31) were Royal Dutch Shell, HSBC and BP, in that order. I did find two funds that seem to meet my criteria: the Invesco European Growth Fund and the Mutual European Fund.

The Invesco fund reported just over 10% in energy shares and less than 10% in financials (as of March 31), and BP wasn't listed among its top 25 holdings. But the fund is weighted toward the U.K., with nearly 35% of its assets in U.K. stocks. Its recent performance has been relatively strong, but it has a high expense ratio.

The Mutual European fund is more geographically balanced and has less than 10% of its assets in energy shares. BP isn't listed among the top 25 holdings. But Mutual has 20% of its assets in financial services, with BNP Paribas and UBS among its top holdings. Mutual has generally ranked among the top funds in its category, which may justify its high fee structure.

The best bet for my strategy may well be a Germany ETF. The iShares MSCI Germany Index ETF is filled with big exporters like Siemens (10% of the portfolio), SAP and ThyssenKrupp. It does contain Deutsche Bank (5% of the portfolio) but no energy companies among its top 25 positions.

The simple lesson in this exercise is to look at the portfolios of your mutual funds and ETFs. They do offer diversification -- but also some unwanted major holdings.

James B. Stewart

• mexico [´meksikəu] n.墨西哥 (初中英语单词)
• european [juərə´pi:ən] a.欧洲的 n.欧洲人 (初中英语单词)
• financial [fi´nænʃəl] a.金融的，财政的 (初中英语单词)
• disaster [di´zɑ:stə] n.灾难，不幸 (初中英语单词)
• appetite [´æpitait] n.欲望；食欲 (初中英语单词)
• satisfaction [,sætis´fækʃən] n.满意；满足 (初中英语单词)
• sentiment [´sentimənt] n.情绪；多愁善感 (初中英语单词)
• investment [in´vestmənt] n.投资；(时间等)投入 (初中英语单词)
• sovereign [´sɔvrin] a.至高无上的 n.君主 (初中英语单词)
• stress [stres] n.强调；压力 vt.强调 (初中英语单词)
• plunge [plʌndʒ] v.插进 n.投入；冲击 (初中英语单词)
• advantage [əd´vɑ:ntidʒ] n.优势；利益 (初中英语单词)
• actual [´æktʃuəl] a.现实的；实际的 (初中英语单词)
• dismay [dis´mei] n.惊慌 vt.使惊慌 (初中英语单词)
• beaten [´bi:tn] beat 的过去分词 (初中英语单词)
• candidate [´kændideit] n.候选人；投考者 (初中英语单词)
• energy [´enədʒi] n.活力，精力；能力 (初中英语单词)
• surprising [sə´praiziŋ] a.惊人的；意外的 (初中英语单词)
• performance [pə´fɔ:məns] n.履行；行为；工作 (初中英语单词)
• contain [kən´tein] v.包含；容纳；抑制 (初中英语单词)
• crisis [´kraisis] n.转折点；危机 (高中英语单词)
• exposure [ik´spəuʒə] n.暴露；曝光(时间) (高中英语单词)
• prudent [´pru:dənt] a.谨慎的；精明的 (高中英语单词)
• decided [di´saidid] a.明显的；决定的 (高中英语单词)
• illusion [i´lu:ʒən] n.幻觉；幻影；错觉 (高中英语单词)
• mutual [´mju:tʃuəl] a.相互的；共同的 (高中英语单词)
• relatively [´relətivli] ad.比较地；相对地 (高中英语单词)
• disastrous [di´zɑ:strəs] a.招致灾祸的；不幸的 (英语四级单词)
• fidelity [fi´deliti] n.忠实；精确；保真度 (英语四级单词)
• strategy [´strætidʒi] n.兵法；战略 (英语六级单词)
• holding [´həuldiŋ] n.保持，固定，存储 (英语六级单词)
• category [´kætigəri] n.种类；部属；范畴 (英语六级单词)