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.
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.