The broad economy may not necessarily reflect what the market is doing, as in the case of Greece and the Global X MSCI Greece ETF (GREK). The ETF is up almost 30% when looking at its 3-month trailing returns, but can it maintain this positive momentum heading into 2021?
The pandemic is doing a number on Greece’s economy as lockdown measures force businesses to shutter its doors. The Greek economy has had its share of challenges the past decade.
“Just starting a faster recovery from a near decade-long fiscal and austerity crisis, Greece’s economy – battered by two COVID-19 lockdowns, will contract at least 10-11 percent and take two years to come back,” said an article in The National Herald. “That was the dire forecast from the Bank of Greece in its Interim Report on Monetary Policy for 2020 as a second wave of the Coronavirus went into a sixth seek, the pandemic expected to last deep into 2021 even with vaccines coming, said the business newspaper Naftemporiki.”
“The bank had been slightly more optimistic in previous predictions but revised downward its expectations for a recovery, with many businesses expected to close, unable to sustain themselves after the lockdowns,” the report added.
GREK Is Ignoring the Noise
In addition to being up almost 30% the past three months, GREK has grown 13% within the past month.
As for the ETF itself, GREK seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Greece Select 25/50 Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”) based on the securities in the underlying index.
The underlying index is designed to represent the performance of the broad Greece equity universe. At a 0.57% expense ratio, GREK gives investors:
- Efficient Access: Efficient access to a broad basket of Greek securities.
- Targeted Exposure: Targeted single-country exposure.
- A Unique Offering: The first and only ETF to directly target Greece.
GREK’s 3-month chart has been performing well, with an uptick in trading volume in November and December. The fund is up above its 50- and 200-day moving average, which casts the fund as a possible value opportunity.
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