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Here's my ETF pick for this week: iShares MSCI Netherlands (NYSEARCA:EWN).

The Netherlands exchange-traded fund (EWN) is often overlooked by global ETF investors despite its consistent performance and high quality multinationals. In the Dutch golden age during the 17th century, Dutch trading, science and art dominated the world scene. It still packs a global punch above its 1.4% weighting in the MSCI World index.

About twice the size of New Jersey with a population of 16.5 million, the Kingdom of the Netherlands is a prosperous and open economy with a bent towards trading with the world. The top multinationals based in the Netherlands accounted for combined revenue of just over $900 billion of revenue in 2007.

Reasons for Selection

1) The Netherlands is trading at the lowest price to cash flow in the world. Its price of less than 3 times cash flow looks out of whack compared to these markets trading at more than 9 times cash flow; Hong Kong, US, UK, Switzerland and Singapore. Australia is at 14 times cash flow.

2) EWN contains a basket of 27 Dutch companies. The global financial services firm ING (NYSE:ING) accounts for 18% of the basket. ING has a dominant position in growing Asian markets such as China, India and Thailand and its direct bank now has 15 million customers worldwide. 50% of its profits come from insurance operations and since European and American markets are rather mature, its strategy is to continue to diversify geographically and move into higher growth areas such as retirement services. The next four highest weighted companies in this ETF are all top quality: ABN Amro (ABN), Phillips Electronics, Unilever (NYSE:UN) and Aegon (NYSE:AEG)

3) Despite the concentration in ING, EWN offers investors good diversification in terms of sectors. Diversified financials account for 18% of the basket, food, beverage and tobacco is 13%, banks, and consumer durables 10%.

Catalyst: EWN is trading at a resistance level and it should hold building a base for recovery.

Risk Factor: Moderate

Tip: Investors should consider a 6% trailing stop loss position and watch how EWN acts early next week. I anticipate a bounce back.

Update: UltraShort Oil (DUG) recommended on 7/18/08 is up 24%.

Source: ETF Pick of the Week: iShares MSCI Netherlands