Brexit Result Propels This ETF Forward

Jim Woods

The United Kingdom’s (U.K.) “Brexit” vote to leave the European Union last year failed to weaken the region’s economy as many had predicted.

Those wishing to play the surprising strength in the United Kingdom may be interested in the iShares MSCI United Kingdom ETF (EWU), a fund focused exclusively on U.K.-based companies. With $2.67 billion in total assets, EWU covers 85% of the top British companies by market capitalization.

The fund is biased towards large caps and features some big names such as Royal Dutch Shell, HSBC Bank and BP. As a result, EWU has highly liquid holdings and experiences high trading volume. On average, EWU trades $60.63 million daily.

From the chart below, you can see that the fund’s price has been on a zigzag upwards since late 2016. The fund’s one-year return is 6.92%, and it is up 4.92% year to date, compared to a year-to-date 5.29% return for the S&P 500. EWU has a relatively high expense ratio of 0.48% and a nice distribution yield of 2.54%.

From a sector perspective, EWU is well diversified. It is roughly 21% invested in financial service stocks, 18% in consumer defensive, 15% in energy and 11% in health care. This fund is designed to represent the current state of U.K. markets, and its portfolio reflects that. EWU has benefitted from the last year or so of economic growth in the United Kingdom, and its defensive holdings lessen the negative impact of any economic downturns.

EWU’s top five holdings are HSBC Holdings Plc (HSBA), 6.89%; British American Tobacco PLC (BATS), 5.31%; Royal Dutch Shell PLC Class A (RDS-A), 4.98%; BP PLC (BP), 4.74%; and Royal Dutch Shell PLC Class B (RDS-B), 4.48%.

Exclusive  S&P 500 Snaps Four-Day Losing Streak; Libyan Unrest Boosts Global Oil; Gold Rises for Fourth Time in Five Sessions

Now that the United Kingdom’s exit from the European Union is officially underway, investors should keep a close watch on this event, as the uncertainties surrounding it may have an unpredictable impact on U.K. stocks. However, seeing as it could take a few years for the split to become official, investing in the United Kingdom may not be such a risky proposition right now.

If you are seeking dedicated exposure to British equities, take a look at the iShares MSCI United Kingdom ETF (EWU) as a potential investment.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE


img
previous article

International investment expert Nicholas Vardy shares the story of his travel to Dubai: the middle east city that has grown at an unbelievable pace.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 5 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

LEARN MORE HERE

Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details

LEARN MORE HERE

Jim Woods

A 20-plus-year veteran of the markets, Jim Woods has varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

Product Details

LEARN MORE HERE

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE