Two ETFs For European Exposure

Despite ongoing concerns of sovereign debt issues in Europe and an extension of loose monetary policies by the European Central Bank, an opportunity may exist in Sweden and the exchange traded funds (ETFs) that track the nation.   

Over the years, Sweden has been amongst the top innovative nations around the world, is known for high worker productivity, has an abundance of skilled labor, has a favorable corporate tax structure and is known for its first rate infrastructure.   Furthermore,  the European nation has been attracting foreign investors and corporations, illustrated by China’s largest networking and telecom equipment company, Huawei’s, decision to set up a new research and development facility to focus on microwave and radio frequency development in the nation. 

Most recently, a research study conducted by Reputation Institute concluded that Sweden ranked the most respected nation amongst the G8, suggesting that respect, trust and the un-likelihood of fraud prevail in the country.  Additionally, Sweden overtook the US and Singapore this year to be placed second in the overall ranking in The Global Competitiveness Report released by the World Economic Forum indicating that the overall business and economic climate in the nation are favorable.  Sweden also was ranked number one in the world in regards to political climate and the third best nation in the world, while ranking number five in the world in regards to openness to trade, flow of capital, exchange of ideas and technologies, movement of labor and cultural integration. 

In a nutshell, the Eurozone is fighting a sovereign debt crisis that could threaten the strength of an economic recovery and continues to remain fragile; however, for those who want to gain exposure to the region, Sweden could be the answer.  Some ways to play Sweden include:

  • iShares MSCI Sweden Index Fund (EWD), which is a country-specific ETF focusing on Sweden.  EWD has 33 holdings and is heavily weighted in industrials and financials, with 29.23% and 26.67% of sector asset allocates, respectively.   
  • Global X FTSE Nordic 30 ETF (GXF), which allocates 50.43% of its assets to Sweden.

Disclosure: No Positions

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