The iShares MSCI United Kingdom ETF’s (NYSEArca: EWU), the largest U.K. exchange traded fund listed in the U.S., is up 3.7% since Prime Minister David Cameron swept to victory in U.K. elections earlier this month.
With conservatives strengthening their position in British parliament, winning 323 seats, some market observers believe this now is the time to consider U.K. equities and the related ETFs.
“Investor euphoria in the aftermath of the astonishing Conservative (Tory) party triumph in the May 7th general election is underpinning equity market returns and has reversed some of the losses in UK sovereign debt (gilts) that accrued ahead of the ballot. In defiance of pre-election opinion polls conducted before the nationwide vote earlier this month, the Tories secured a slim, six-seat parliamentary majority in the House of Commons at the expense of both their Labor and Liberal-Democratic opponents,” according to S&P Capital IQ.
The $3 billion EWU has a whopping 7.1% trailing 12-month yield, according to iShares data.
It does pay to remember that the U.K. is one of the best, if not the best, ex-U.S. dividend market. In 2014, U.K. firms once again offered excellent dividend growth. Payouts there surged 31% to $135 billion, according to Henderson Global Investors. [Good Timing for This new ETF]
S&P Capital IQ has a marketweight rating on EWU, but if the pound loses steam without dragging U.K. stocks lower, the Deutsche X-Trackers MSCI United Kingdom Hedged Equity ETF (NYSEArca: DBUK) and the WisdomTree United Kingdom Hedged Equity Fund (NasdaqGM: DXPS), two of the more unheralded members of the rapidly growing currency hedged ETF group, merit consideration. Those ETFs are each up more than 8% this year. [Opportunity With Sterling Hedged ETFs]