A “frontier” economy that likely flies under the radar but is now represented in two separate exchange traded fund is that of Poland.
Market Vectors Poland (NYSEArca: PLND) debuted in late 2009, and is composed of 25 equities that are headquartered or derive at least half of their revenues in Poland. The index is currently very heavy Financials, with a 34.02% weighting followed by Utilities (14.07%), Basic Materials (13.50%), and Energy (13.18%) as the top weighted sectors.
BlackRock’s iShares responded in mid 2010 with iShares MSCI Poland Investable Market Index (NYSEArca: EPOL) which, as its name suggests, tracks an MSCI based index and has a similar makeup to PLND.
From a sector standpoint, the top weightings are as follows: Financials (38.54% weighting), Basic Materials (16.63%), Utilities (12.80%).
Top holdings in these two funds demonstrate some replication as well, as EPOL’s top 3 holdings are PKO (11.64%), KGH (10.42%), and PZU (10.07%). PLND’s top 3 are PKO (8.18%), PEO (6.71%), and PZU (6.67%).
In the trailing one year period, EPOL has outperformed, down 24.21% versus PLND losing 27.60%, and year to date EPOL has rallied 20.10% versus PLND up 19.78%. Perhaps not surprisingly, Poland has displayed a high level of correlation to the Russian equity market over time as well (see RSX – Market Vectors Russia).
Given the geographic similarities and locale of the two countries as well as the background and nature of Poland as a former Eastern Bloc country during the days of the U.S.S.R., both Poland and Russia have many things in common as one might expect and thus the fortunes of the two countries along with other Eastern European economies, are often tied together.
iShares MSCI Poland Investable Market Index
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