Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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.


© 2005-2022 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