Investors can now gain access to all the countries that make
up the infamous PIIGS acronym.
Wednesday, the Global X FTSE Portugal 20 ETF (
) opened for trading as the first ETF to focus solely on the
country. The ETF is designed to reflect the broad based equity
market performance in Portugal.
The index is made up of 20 top stocks in the country with
exposure to the utilities, consumer services, financials, energy
and more. The top 10 holdings make up 81 percent of the portfolio
with the top holding accounting for a very high 20 percent. The
combination of concentrating in one country and in the top
holdings make the ETF more risky than many of its single-country
ETF peers. The annual expense ratio for the ETF is 0.61
The country is still attempting to cut spending to get in line
with targets set by international lenders. They intend to cut
spending by 3.9 billion euros next years versus raising taxes in
2014. Since the 2011 bailout amount of 78 billion euros, the
country has struggled with recession due to the austerity
The silver lining may be that the country is expected to
return to growth next year with a GDP gain of 0.8 percent. The
country is also expected to run a government budget surplus of
3.5 percent after the aid program ends in 2014. The unemployment
rate will remain high according to the estimates, at 17.7
The stock market has gained 15 percent in 2013 and is up over
40 percent since it bottomed in the summer of 2012. The country
is the laggard of the PIIGS this year and investing in PGAL would
be a play on a continued recover for the country in the coming
years. If Portugal is able to catch up to its infamous peers PGAL
could turn out to be a value play at current levels.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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