Before investing in a country-specific exchange-traded fund (ETF), look inside it and see what companies are in it and especially how much they are weighted. The top company might account for more than you think, which can push up or pull down the ETF’s performance, says Carl Delfeld for ETF XRAY. A classic example of this is happening now with Sweden’s ETF iShares MSCI Sweden Index (EWD). The world’s largest telecommunications equipment manufacturer, Ericsson, accounts for 21% of the basket.

Ericsson’s large composition in EWD has been a good thing for the ETF until recently when the company issued a severe profit warning that wiped out a quarter of its market value, sparking a sweeping change to its business strategy, reports David Ibison and Andrew Parker for the Financial Times. Ericsson said operating income is expected to plummet 36% in the third quarter compared with the same period last year. So it comes as no surprise that EWD was down 5.3% yesterday. Fortunately, it’s still up 11.9% year-to-date. Hopefully Ericsson’s loss won’t pull EWD down too much more.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.