“Recent political turmoil in Egypt and in the region has significantly driven up the volatility of this fund. Even during more-stable times, the Egypt market can be very volatile. In 2008, the Egypt benchmark EGX 30 fell by around 70% (underperforming the MSCI Emerging Markets Index) and subsequently rallied about 100% until January 2011, when domestic political turmoil erupted,” Patricia Oey for Morningstar wrote in an ETF analysis.
This volatility is enough to keep investors wary that another decline is possible. [Egypt ETF Rallies 30% to Start 2012]
EGPT is heavily weighted to the financial sector, followed up by telecom service companies. Materials and industrials follow up the mentioned sectors, which gives insight into the volatility the ETF has experienced, reports Eric Dutram for Zacks. Most of the companies held by EGPT are small-cap companies which could be the reason the fund is rallying in 2012. [ETF Spotlight: Egypt]
If the political situation becomes more unstable, the ETF’s 2012 gains could come under pressure. [Egypt ETF Falls Before Elections as Violence Flares]
Market Vectors Egypt ETF
Tisha Guerrero contributed to this article.