iShares, the world's biggest provider of ETFs, has recently filed for quite a number of products to widen its product portfolio. These products range from International Minimum Volatility ETFs, to funds focusing on emerging markets to bond ETFs (read: iShares Files for 3 International Minimum Volatility ETFs ).
Among these, the issuer has also filed for a product focusing on Europe. While the issuer has not yet decided on the expenses or some other important aspects of the product, we have highlighted some of the key points available below:
Proposed European Fund in Focus
As per the recent SEC filing , the proposed passively managed ETF will trade under the name of iShares MSCI EUROPE IMI ETF though the sponsor has not yet decided on the ticker symbol. The fund seeks to match the performance and yield of the MSCI Europe Investable Market Index (IMI) before fees and expenses.
The benchmark seeks to track 15 developed market European nations, namely, Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Sweden, Spain, Switzerland, and the United Kingdom.
The fund primarily seeks to include companies from the consumer staples, financials and industrials sectors across the entire spectrum of market capitalization levels (read: Poland: A Better Eastern Europe ETF? ).
How Does it Fit in the Portfolio?
The proposed product can be a good choice for investors willing to invest in a recovering Europe. All the major nations in the Euro zone - France, Germany, the Netherlands, Italy and Denmark - emerged from recession last year.
Moreover, two countries, Spain and Ireland, have already opted to exit from the bailout program (read: Euro Zone Recovery Puts Ireland ETF in Focus ).
Consumer confidence as well as economic sentiment in the region is picking up, indicating a brighter outlook.
However, investors should keep in mind that the euro recovery is still in a nascent stage and there are deflationary risks looming over this region. Low inflation is believed to be a major hurdle for economic recovery. Also, the unemployment rate in the region is pretty high - being stuck at double-digit levels.
The equities ETF space has quite a number of funds targeting the broad European region. Vanguard FTSE Europe ETF ( VGK ) is the largest player with an asset base of $15.6 billion.
The product tracks the FTSE Developed Europe Index, holding 504 stocks in its basket. The fund returned 24.3% last year and is one of the cheapest options in this space, charging investors just 12 basis points a year.
Other funds tracking the European region include SPDR Euro Stoxx 50 ETF ( FEZ ), WisdomTree Europe SmallCap Dividend Fund ( DFE ) and First Trust Europe AlphaDEX Fund.
Also, iShares has some products targeting particularly the European Union including iShares MSCI EMU ETF ( EZU ) and iShares Europe ETF ( IEV ). While EZU manages an asset base of $10 billion, IEV has garnered over $3 billion in assets (see all the European Equity ETFs here ).
Moreover, the products from iShares in this space have managed to yield decent results in the past - over 30% returns in the last one year. Given the number of other funds in the market already though, it might be difficult for another broad European product to find its footing, though only time will tell if this MSCI Europe IMI product can find a niche in the space.
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WISDMTR-EU SC D (DFE): ETF Research Reports
ISHARS-EMU IDX (EZU): ETF Research Reports
SPDR-EU STX 50 (FEZ): ETF Research Reports
ISHARS-EURO (IEV): ETF Research Reports
VANGD-FTSE EUR (VGK): ETF Research Reports
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