In last week’s ETF Talk, I mentioned the opportunities for investors in emerging markets such as India. This week, I want to introduce you to another exchange-traded fund (ETF) that focuses on a different emerging-market country, Poland. The Market Vectors Poland ETF (PLND) allows you to access one of the fastest-growing economies in Central and Eastern Europe.

This fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Poland Index. The index consists of at least 25 companies that either are headquartered in Poland or derive at least 50% of their revenues from the country. As of March 15, 2011, the fund holds 29 companies. As of the end of the fourth quarter of 2010, the top four sectors were financials, 40.2%; energy, 12.4%; utilities, 10.3%; and consumer staples, 8.5%.

Poland is one of Central Europe’s largest countries with a population of 38 million. The country serves as an excellent model for a successful transition from communism to a free-market economy. Since its transition in 1990, Poland has shown vast economic expansion. It has taken measures to privatize state-owned enterprises, increase real income and foster investment conditions to attract foreign interest. The European Union (EU) recognized Poland’s progress by admitting the country as a member in 2004. That membership in the EU has boosted its economy further because it now has access to EU funding and assistance.

Poland has several advantages that have kept the country growing, even during a recent worldwide economic downturn. Because Poland relies on its own growing consumer market rather than on exports, it was able to weather the 2008-2009 economic storm quite nicely. In fact, it was the only country in the EU to maintain positive GDP growth throughout 2008 and 2009. This is due to Poland relying less on foreign trade and foreign currency than its other Eastern and Central European neighbors. The domestic economy has witnessed expansion, reduced unemployment and a rise in wages. Another factor in its domestic growth is the performance of its national stock exchange, which highlights its commitment to private sector growth.

Below you’ll find a chart of Poland’s astonishing economic growth:

Another key to Poland’s sustained economic growth is its commitment to increase foreign direct investment. Its central location east of Western Europe and west of Russia, as well as its low corporate tax rate and young, educated work force, draw foreign companies that are looking to expand to Central Europe.

While there’s no denying that Poland has come a long way in the last two decades, it still has room for improvement. There is extreme disparity between the rich and poor in Poland, and the country has become the largest beneficiary of the European Union’s “Cohesion Policy” funding, aimed at closing such wealth gaps, reforming transportation infrastructure and further developing privatization. It is extremely important for Poland to control its increasing national debt, further remove barriers to privatization and improve its lacking infrastructure.

As you can see from the chart below, PLND has performed well since its inception, but it has struggled after coming off of its November 2010 highs. However, it may be worth considering as an investment to diversify your portfolio, once the fallout from the Japanese earthquake, tsunami and nuclear disaster stops driving down stock markets around the world.

I personally think the long-term trend for Poland is promising. However, like most emerging market funds, PLND is not for the faint of heart.

If you’d like particular advice about ETFs, including appropriate stop losses, please sign up for my ETF Trader service. As always, I am happy to answer your questions about ETFs, so do not hesitate to email me at askdoug@dougfabian.com. You may see your question answered in an upcoming ETF Talk.