Belgium ETF Dinged by Financials, But Any Turnaround Could Deliver a Boost

What comes to mind when you hear the iShares MSCI Belgium (EWK) exchange traded fund (ETF)?

It gives a lot of banking exposure – these days, that’s tantamount to a four-letter word. But if you can look beyond the turmoil of the credit crunch, EWK can look undervalued. While it has a slew of financial holdings that make up around 50% of the fund, Gary Gordon for ETF Expert says it’s undervalued by any fundamental valuation model.

Belgium also struggles as an importer of commodities – it’s resource-poor, and the commodity boom elsewhere might be taking a toll on the country.

However, Gordon says that it’s less volatile than many of its single-country ETF peers. While he steers clear of single-country funds and favors a more regional approach, these funds can be good for a disciplined investor who has a stop-loss plan. Belgium could be a fund for the investor who believes that the financials are primed and ready for a turnaround. This fund could be ready to benefit more than most, thanks to its heavy allocations in the sector.