“Generally investors should be aware that the MSCI Turkey Index is not a good proxy of the Turkish economy. The index is heavily biased towards financials (around 43%), whereas the sector represents less than 5% of the country’s GDP. The TUR ETF provides diversification benefits when added to an equity strategy as it offers the following correlations vs: EEM (0.7) and SPY (0.47),” according to Emerging Equity.
For the daring bargain hunter, Emerging Equity recommends TUR “as a satellite position within a global world or a global emerging markets or a more local EM strategy strategy. Investors should always check the allocation of the country within their underlying benchmark in order to play it on a tactical basis.”
“Admittedly, the fact that a currency is fundamentally overvalued does not mean that it will adjust anytime soon – other factors may play a more important role in determining its level in the near term. But countries whose currencies are in this position are clearly comparatively exposed to tighter monetary conditions. Accordingly, the South African rand, New Zealand dollar and Turkish lira are likely to remain at risk when Fed tightening comes back onto the agenda – even if that isn’t until next year,” according to Capital Economics.
iShares MSCI Turkey ETF