=EPOL : Tracks Poland, one of Europe's hottest markets

The broad Polish WIG index is up about 17% so far this year, easily outperforming the main indexes in France, Germany and Britain. Little wonder, iShares MSCI Poland Capped ETF (EPOL) joined the IBD ETF Leaders screen this month. It is trading at the highest levels in nearly two years.

Shares of the ETF broke out of a consolidation in January and sped up 18% from Jan. 11 to March 21. The ETF cooled its advance in late March and part of April as it pulled back to the 50-day moving average. Shares found support and resumed their advance. The ETF is currently too extended from buy areas, so investors must wait for a new opportunity to emerge on the chart.

IShares Poland Capped owns about 35 stocks traded in the Warsaw Stock Exchange. It's called a capped ETF because no single component can exceed 25% of the portfolio, and all components with more than a 5% weighting must not exceed 50% of the fund's total weighting.

More than 40% of the portfolio is invested in financial firms, with nearly 20% in energy companies and 11% in materials. The single largest holding, with 12% of the fund's weighting, is Polski Koncern Naftowy Orlen, an operator of refineries and gas stations that also provides aviation fuel, heating oil and other products.

The ETF has performed better than the WIG index this year. EPOL is up more than 30% and up nearly 40% in the past 12 months. The WIG is up about 30% in the past 12 months. In November, iShares Poland ETF began a sharp recovery after a deep slump that began in November 2013. Shares sank as much as 52% in that period.

Investing abroad involves certain risks that domestic investors don't face. As the ETF's prospectus warns, Poland's economy (the largest in Central Europe) depends largely on exports of raw materials and consumer goods. "As a result, Poland is dependent on trading relationships with certain key trading partners, including Germany and other EU countries."

In a report last November, the Organisation for Economic Cooperation and Development forecast GDP growth of 3% a year in 2017-18. Poland is trying to catch up with Europe's developed nations in terms of living standards and economic growth, says the World Bank, but must leverage technology and cope with a rapidly aging population.