By Carl Delfeld of Chartwell ETF and ETFfolio

While watching the Olympics, I couldn’t help myself from thinking about the investment opportunities of the various countries participating in the games. I hope many investors were also reminded at how the world is changing and why they need a global portfolio to capture value and growth around the world. Let’s look at a few global investing strategies and end with a portfolio of Olympic powerhouses.

There are several ways to build a global portfolio. Picking stocks gives you the chance to zero in on promising industries, sectors and management teams and having a balance of American and international companies in your portfolio can make a big difference in returns. Created to be an alternative to the Dow Jones Industrial Index, the Chartwell Global 30 is a blend of thirty equal-weighted companies with the twist of having exposure to fifteen American and fifteen international companies representing twelve different countries.

The Chartwell Global 30 recently passed its three-year anniversary beating the Dow, S&P 500 and EAFE benchmarks handily. Selecting stocks allows me the chance to gain diamond exposure through Anglo-America, Brazil’s growing energy reserves through Petrobas and the amazing $2,500 car from India’s Tata Motors.

Another strategy is to follow a “pick countries, not stocks” approach using country-specific exchange-traded funds. Chartwell ETF has specialized in country ETFs since 2002 using primarily iShares MSCI ETFs that now offer exposure to 26 countries. A newcomer with a strong balance sheet, Northern Trust’s NETS ETFs, currently offers investors access to 15 markets and aims to double this within a year.

Picking country ETFs allows investors the flexibility to focus in on specific markets and sectors. Using a broad-based international ETF like the Europe, Australia and Far East Index (EFA) may be simple and low cost, but 43% of your money will go to Japan and the United Kingdom. Adding France and Germany to the mix brings this to about 65% leaving little room for great markets like Singapore, Ireland and Hong Kong.

Why not challenge these backward-looking, market-cap weighted indexes by looking forward and selecting markets based on future potential. Chartwell’s Country Rotation ETFfolio does just that. Even our EAFE Equal-Weight ETFfolio using seventeen country ETFs has beat the market cap weighted version by a wide margin.

Use your imagination and the flexibility of ETFs to create your own funds. Chartwell has an ETF folio that follows the Index of Economic Freedom and another that offers exposure to global sectors in which the U.S. has a competitive advantage.

And while it is admittedly a stretch, let’s consider what an ETFfolio of the top ten countries in the Beijing Olympics medal count would look like.

The U.S. did remarkably well across the board underscoring its role as the world’s leading investment destination. China surged to win the most gold and reach the symbolic level of 100 medals. Quite an achievement that punctuates China’s growing heft. With the Shanghai Composite down 55% this year, it has come down to earth and is interesting from a valuation perspective.

Next comes Russia with a performance fueled by a strong Olympian tradition and petro dollars but perhaps a bit overshadowed by the Georgian fiasco. I will take a pass on this one even though it is off 36% since just May.

Next is the UK and Australia. Both are financial-oriented markets but the UK is having a much harder time coping with its real estate bubble, slower growth and a weak sterling. Australia, while not cheap, has strengthened on the bounce in commodities evidenced by strong profits at BHP and Rio Tinto. We need to keep an eye on more competitive banking market since the top four Aussie banks represent 20% of the market’s value.

France and Germany were neck and neck representing more than half of continental Europe’s largest companies and market cap. Germany is facing a sharp slowdown and weak consumer confidence but has some great multinationals like Siemens in its ETF basket. I like France primarily because after a slow start, President Sarkozy is gaining traction in executing some market –oriented campaign promises. Both of these markets are relatively cheap on a price-to-earnings and price to cash flow basis.

Next comes South Korea, an industrial powerhouse, favored partner of China and striving mightily to be noticed on the world stage. It has spent a bundle supporting its currency and exports have proved to be resilient. Next is the surprisingly robust performance of Italy. Along with Ireland, Italy has caught my eye as one of the cheapest markets in the world with the added bonus of undertaking significant market reform.

Alas, the Ukraine grabs the number ten slot but without an ETF the mantle falls on Japan to round out the top ten. Japan seems to be struggling and searching for a way to regain its mojo, consumer and investor confidence and a somewhat elusive economic growth. On the plus side, Japan ETFs offer very high quality multinationals, low political and currency risk and its smaller companies are trading collectively at below book value. Another important advantage of having exposure to Japan ETFs is that its market is only 29% correlated to the S&P 500 index.

Below is how this Olympian ETFfolio would look like with tickers from both iShares and the NETs country ETFs. This grouping, including Russia, is up slightly for the week.

United States (SPY)

China (FXI), (SNO)

Russia (RSX)

United Kingdom (EWU), (LDN)

Australia (EWA), (AUS)

Germany (EWG), (DAX)

France (EWQ), (FRC)

South Korea (EWY)

Italy (EWI), (ITL)

Japan (EWJ), (TYI)