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David Stafford
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Student of markets, enjoys following their course.
My book:
Around the World in Several Pieces
  • Things Found Along The Way(EWO) 0 comments
    Oct 14, 2013 4:59 AM | about stocks: EWO

    I was looking for some indirect per se, US market exposure to Raiffeisen bank, when I stumbled upon an interesting ETF; EWO.

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    EWO is an interesting ETF, that I like, that is Austria-Centric. My recent studies on Eastern European history reminded me of Austria's one time greatness per se, and its prolific empire, but on the by and by per se, Austria is often easily overlooked, per se, at least I haven't heard of its mention in local media sources for a long time(which isn't saying much honestly).

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    Either way though, this Austrian ETF, offers seemingly a much more fundamental approach to investing, than one might find in the famed dessert and coffee culture of said nation's capital. Even though I admittedly would be a very happy man, if my local cafe's and coffee houses could hold a candle to those famed establishments in Vienna, the fundamentals behind this ETF make it a really interesting etf per se.

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    Though often national ETF's will have some core industry exposure, I really like the industry exposure mix in EWO.

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    According to the always useful etfdb.com, EWO has a mix of holdings whereby, the breakdown is as follows; ~21% Financial Services, 17% Basic Materials, and 17% energy. Hence, we get a healthy amount ofEastern European banking exposure(which hopefully atm is undervalued given the situation with non-performing loans in said region), + some basic materials companies, which hopefully will always have some worth, and some energy companies, which unless there is a Paleolithic lifestyle revolution in the region will presumably never become distressed. Hence, we have 50% of the portfolio representing industries with a core-local-economic function, and we have some banks with exposure to financial institutions presumably operating in this region with growing potential, namely Eastern Europe. The rest of the ETF for the sake of mentioning it is comprised of; ~10% Real Estate, and ~10% Industrials, with another 5% each in Consumer and Communications respectively, and another ~2% in Tech.

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    What I like about this ETF too, is the way that growth is nicely mixed with value. One could argue that with so little exposure to consumer tendencies that this ETF is somewhat safe. Mix this with its capitalization mix and we have a tasty cup of coffee indeed.

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    For our capitalization mix we have the ETF's holdings representing; 25% small, 25% large, and 50% medium. Hence, we have 75% of the stocks in smaller than large cap sized holdings, and 0% in giant.

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    With this conservative balancing, and "room-for-growth" capitalization, I like EWO. Its indirect exposure to Eastern Europe, perhaps through the cultural legacies of the Austro-Hungarian empire, is also favourable. In short, its a great ETF.

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    In thinking ETF's of the like, the subtext behind its value can be better discussed per se. For example, many localized ETF's have large sort of commodity plays built into them. Most of the world's countries aren't as big as the US or China for example, so there isn't the sort of diversification built into them. Hence, I never realized Austria had such a neat economy before, but upon researching at least this ETF its starting to look a lot better.

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    For many European ETF's there will probably be overly-euro-shock, and insecurity dampened prices, which personally would lead me to be weary, of all but very locally specialized investment vehicles, however, with the possibility of getting this tasty package, it may be worth other local ETF's from this region to see what comes with other packages. Surely, none the less though, it will be hard to beat the ETF of a country which seems to be celebrated for its international banking, as well as its coffee and pastries, though, for that my friends is clearly a rose amongst thorns in any garden.

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    Either way, for a look into "award winning", whatever that implies, banks from various Eastern European localities, here's a list of the winners from 2013, according to "Global Finance Magazine"; http://www.gfmag.com/tools/best-banks/12392-worlds-best-emerging-markets-banks-2013-in-central-a-eastern-europe.html

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