The newest entrant into the iShares exchange traded fund (ETF) family is a fund that targets the emerging economy of Eastern Europe. But it might be worth looking under the hood to see if it’s got the exposure you’re seeking.
The new iShares Emerging Markets Eastern Europe Index Fund (NYSEArca: ESR) has the following breakdown:
- Country weightings include: Russia 75%, Poland 13%, Czech Republic 6.4%, Hungary 6.1%.
- Sector allocation include: Energy 52%, Financials 16%, Materials 11%, Telecom 10%.
The fund’s largest allocations are in energy and Russia, with its two major holdings in Russia’s Gazprom, at 25%, and Lukoil, at 10%. Potential investors should be aware of higher risks, yet possible higher profits, involved with a fund that has a high percentage in any single company, writes Roger Nusbaum for TheStreet. The fund has an expense ratio of 0.72%. (More on Eastern Europe’s economy).
An alternative to iShares’s new ETF is the SPDR S&P Emerging Europe (NYSEArca: GUR), which is currently up 88.4% year-to-date. GUR has an expense ratio of 0.59%.
- Country weightings include: Russia 65%, Turkey 14.8%, Poland 10.4%, Hungary 5.1%, Czech Republic 4.2%, U.S. 0.5%
- Sector allocation include: Energy 45.3%, Financials 22.9%, Materials 10.7%, Telecom Services 9.2%, Consumer Discretionary 3.4%, Industrials 3.0%, Utilities 2.7%, Health Care 1.2%, Consumer Staples 0.9%, Miscellaneous 0.4%, Info. Tech. 0.4%
New ETF provider Emerging Global Shares also has the Dow Jones Emerging Markets Energy Titans (NYSE: EEO):
- Country weightings include: Russia 36.3%, India 18.9%, China Offshore 16.3%, Brazil 9.5%, South Africa 6.8%, Thailand 4.2%, Chile 2.5%, Colombia 1.9%, Poland 1.6%, Hungary 0.9%.
Which ETF do you choose? It depends on the allocation you’re seeking and how much exposure to energy you’re seeking. GUR has a more even distribution among various sectors, but if you’d like a heavier weighting in energy, EEO and ESR may be worth some investigation, too. Be mindful, too, that some of these funds have heavy allocations to a single stock, which may increase volatility. (Four things going for Russia).
For more information on Eastern Europe, visit our Eastern Europe category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.