Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
QE Forever: The Fed's Dramatic About-face - 21st Feb 19
Gold Technical Perspective – Why So Bullish? - 21st Feb 19
Sheffield "Mi Amigo" Memorial Fly Past at 8.45am on 22nd Feb 2019 - 20th Feb 19
Here’s The Real Reason You Stress About Money - 20th Feb 19
Five Online Marketing Predictions that will Matter in 2019 - 20th Feb 19
Has Gold Price Reached Upside Resistance Near $1340-1360? - 20th Feb 19
So Many Things are Not Confirming Stock Market Rally - 20th Feb 19
Forex Trading Management: The Importance of Being Prepared - 19th Feb 19
Gold Stocks are Following This Historical Template - 19th Feb 19
Here’s Why The Left’s New Economic Policies Are Just Stupid - 19th Feb 19
Should We Declare Emergency for Gold? - 19th Feb 19
Why Stock Traders Must Stay Optimistically Cautious Going Forward - 19th Feb 19
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Greece Bond Market Crash, Europe and ETFs

Interest-Rates / Global Debt Crisis Apr 29, 2010 - 10:54 AM GMT

By: Ron_Rowland

Interest-Rates

Best Financial Markets Analysis ArticleWhen Americans hear about Greece, the first thought that comes to mind is usually “ancient history.” Now Greece is all over the headlines for its financial woes.

But if truth be told, Greece hasn’t done anything different from many other countries, including the U.S.! The government simply spent too much money, the citizens enjoyed too many overly-generous social programs, and eventually the bill came due. Now someone has to pay up — and the Greeks don’t have the cash.


The complication is that Greece is part of the euro currency union. This means other member countries can’t just let Greece default on its debts. Therefore a grand negotiation is now underway to figure out how they’ll share the pain.

Greece’s economy is crumbling before our eyes.
Greece’s economy is crumbling before our eyes.

A further complication is that several other European nations, such as Portugal, Ireland, Italy and Spain, are teetering on the edge of disaster too.  

So today I want to draw your attention to some exchange traded funds (ETFs) that focus on Europe. You can think about it as a list of ETFs to avoid for now — or a shopping list to consider buying whenever Greece and the rest of Europe finally touch bottom.

Buying Europe in an ETF …

Numerous ETFs will give you a broad-based allocation to European stock markets. The two most popular are:

  • Vanguard European ETF (VGK)
  • iShares S&P Europe 350 (IEV)

Both these funds include 15+ different countries, but they aren’t equally weighted. The United Kingdom, France, Germany and Switzerland are the biggest European markets and together they account for the bulk of the holdings. And there is little or no direct exposure to Greek stocks.

ETFs have erased many of Europe’s borders for investors.
ETFs have erased many of Europe’s borders for investors.

Another group of Europe ETFs includes multiple countries in various smaller combinations …

iShares MSCI EMU (EZU) is interesting because it includes only those nations that use the euro as official currency. That means EZU is heavy on France and Germany and omits the U.K. and Switzerland. Greece weighs in at just 1.2 percent of this ETF.

Since the worst of the economic problems are in Southern Europe, you might have better luck traveling north on the map to look at the Scandinavian countries. Global X FTSE Nordic 30 (GXF) does this for you, with exposure to Sweden, Denmark, Norway, and Finland.

iShares MSCI Emerging Markets Eastern Europe (ESR) and SPDR S&P Emerging Europe (GUR) specialize in the smaller, less developed European markets. In most cases these are the former communist countries that remain closely tied to Russia, such as Hungary and Poland — and, of course, Russia itself.

Buying Europe — One Country at a Time

Another way to invest in Europe is with single-country funds. This can be useful because it lets you customize a portfolio with just the allocation you think will work. Here are some ETFs you might want to consider:

  • iShares MSCI Austria (EWO)
  • iShares MSCI France (EWQ)
  • iShares MSCI Germany (EWG)
  • iShares MSCI Italy (EWI)
  • iShares MSCI Netherlands (EWN)
  • iShares MSCI Spain (EWP)
  • iShares MSCI Sweden (EWD)
  • iShares MSCI Switzerland (EWL)
  • iShares MSCI United Kingdom (EWU)
  • Market Vectors Poland (PLND)
  • Market Vectors Russia (RSX)
  • SPDR S&P Russia (RBL)

A couple of sector-based, European ETFs might be worth a look, too:

  • iShares MSCI Europe Financials Sector (EUFN)
  • iShares FTSE EPRA/NAREIT Europe (IFEU)

IFEU is a real estate fund, by the way, a fact which is not at all apparent in the unwieldy name.

Inverse Europe …

Finally, ProShares UltraShort MSCI Europe (EPV) is a 2X daily leverage inverse fund. That means it’s designed to move twice (200 percent) the inverse (opposite) of the daily performance of the MSCI Europe Index before fees and expenses.

In other words, if for example the index drops 10 percent, the ETF’s shares could rise 20 percent.

Try to trade when the U.S. and European markets are open.
Try to trade when the U.S. and European markets are open.

Given how crazy the situation is right now in Europe, you might be tempted to jump right into EPV. Be careful if you do: It’s best used as a short-term trading vehicle. EPV can be a big winner if your timing is just right, or it can hand you big losses if you are even a little bit early or late.

BONUS: Trading Tip

If you buy or sell any kind of Europe-focused ETF, it’s usually a good idea to enter your order in the morning hours, U.S. time. That’s because most European markets are still open and there is typically more liquidity. You’ll see the savings in the form of a tighter bid/ask spread and quicker fills.

Best wishes,

Ron

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules