This summer, London will become the first city ever to have
hosted three Olympic Games. While traders may be watching the
action, they may be more interested in how they can trade around
the event.
More than being a sporting spectacle of epic proportions, the
Olympics are a money-maker. A rather large one at that and some
of the biggest names in business, both foreign and domestic,
shell out millions of dollars to have their names and products
intimately tied to this global sporting event.
Purists may think it is sad that Olympics is now nearly as
corporate as NASCAR, but that does create some opportunities for
ETF investors. Consider the following funds as legitimate plays
on the 2012 Summer Olympics.
Consumer Staples Select Sector SPDR (NYSE:
XLP
)
Not only is the Consumer Staples Select Sector SPDR an
ideal ETF with which to ride out market
volatility
, it is also chock full of major Olympics sponsors. XLP, the
largest consumer staples ETF, is also the cheapest with an
expense ratio of 0.18%.
Worldwide Olympics sponsors include Dow components Procter
& Gamble (NYSE:
PG
) and Coca-Cola (NYSE:
KO
), two stocks that combine for over 25% of XLP's weight. Kraft's
(NYSE:
KFT
) Cadbury unit is a 2012 Olympics supporter. That stock is XLP's
seventh-largest holding with an allocation of 4.63%.
SPDR S&P International Energy Sector ETF (NYSE:
IPW
)
The SPDR S&P International Energy Sector ETF makes the
Olympics ETF list for one reason: The fund's 10.43% allocation to
BP (NYSE:
BP
). Europe's second-largest oil company has been waging a public
relations offensive for almost two years following the Gulf of
Mexico oil spill in an effort to restore its battered image. With
the Olympics on BP's home turf, the event marks one more
opportunity for the company to regain some lost brand value and
try to convince folks the company is not as evil as some would
like to believe. BP is IPW's largest holding.
iShares MSCI United Kingdom Index Fund (NYSE:
EWU
)
The iShares MSCI United Kingdom Index Fund is the largest ETF
devoted exclusively to the host nation, warranting the fund's
inclusion on this list. Several EWU components including BP, Rio
Tinto (NYSE:
RIO
) and Lloyds Banking Group (NYSE:
LYG
) are Olympics sponsors.
The temporary economic benefit a major international sporting
event provides to the host nation could not come at a better time
for the U.K. and EWU. Amid a U.K. recession and Europe's
worsening sovereign debt crisis, EWU has plunged 8% in the past
month. The newly minted iShares MSCI United Kingdom Small Cap
Index Fund (BATS: EWUS) also merits consideration as an Olympics
ETF play.
iShares Dow Jones U.S. Financial Services Index Fund
(NYSE:
IYG
)
For those that dare dance with financials at the moment, the
iShares Dow Jones U.S. Financial Services Index Fund is a
credible 2012 Olympics. Still two months removed from the start
of the games, Citigroup (NYSE:
C
), IYG's third-largest holding, has been running plenty of
commercials with Olympics tie-ins. In addition, Visa (NYSE:
V
), IYG's fifth-largest holding, is a worldwide Olympics partner.
Those two stocks combine for over 11% of IYG's weight.
Industrial Select Sector SPDR (NYSE:
XLI
)
Clearly more a play on a potential rebound in U.S. stocks, the
highly cyclical, economically sensitive Industrial Select Sector
SPDR pops up on the Olympics ETF list because General Electric
(NYSE:
GE
) and United Parcel Service (NYSE:
UPS
) are major 2012 Olympics sponsors. Those stocks are XLI's two
largest holdings, combining for over 17% of the fund's
weight.
iShares MSCI Germany Index Fund (NYSE:
EWG
)
Time to give the ETF that tracks the Euro Zone's largest economy
its due as a small Olympics play. Adidas and BMW are London 2012
Olympics partners. Those two highly visible German brands account
of just over 5% o EWG's weight.
For more on ETFs and international sporting events, please see
here
.
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