The Euro zone finally emerged from the 18-month long recession
last year, but other economic problems still loom large over the
region. The economy is now running the risk of stagnation. (read:
European ETFs in Focus on Standard and Poor's
It is expected that GDP growth for this region dipped to
~0.4%-0.5% in 2013. Also, unemployment stands out like a sore
thumb at a record high of 12.1%.
Moreover, there are risks that the Euro zone might suffer from
deflation, a condition in which prices fall, thus arresting
growth within the economy. The current inflation figure of 0.8%
is well below European Central Bank's target inflation level of a
tad under 2%.
Even the record low interest rate of 0.25% seems to be
insufficient to bolster demand.
Is There Any Gem In this Region?
While currently things are not so bright for the Euro zone and
its economy is expected to grow at a moderate 1.1% in 2014, one
country that stands out in this region is Denmark.
After four long years of stagnation, this country within the
Euro zone also managed to come out of recession last year. (read:
3 Top Ranked Europe ETFs to Buy Now
Though the country is currently going through record high
levels of household debt, which is hampering consumption growth,
the country's financial regulator is believed to be working
closely to regulate the credit policies of mortgage banks to
prevent another housing bubble.
The country has a solid economic model which constantly
strives to look for new ways to tackle problems. The country has
stable employment levels thanks to its policy of encouraging
employers to provide training to their employees.
Moreover, the country has lower budget deficits, less
inequality and a high ratio of working class to total population.
The country is witnessing improving fixed capital investment, and
rising exports on the back of strengthening external demand.
Further, the Nordic region enjoys ample foreign-exchange
Also, buoyed by lower interest rates, improving confidence and
healthy employment growth,Denmark is expected to grow at the rate
Based on these strong fundamentals, the Danish economy is
expected to continue outpacing other Southern European
Thus, a look at this top-ranked Danish ETF could be a good
idea to capture the surge in the space, especially based on the
Zacks ETF Ranking system.
About the Zacks ETF Rank
This technique provides a recommendation for the ETF in the
context of our outlook on the underlying industry, sector, style
box or asset class. Our proprietary methodology also takes into
account the risk preferences of investors.
The aim of our model is to select the best ETFs within each risk
category. We assign each ETF one of five ranks within each risk
bucket. Thus, the Zacks ETF Rank reflects the expected return of
an ETF relative to other ETFs with a similar level of risk.
Using this strategy, we have found one Danish ETF - the
iShares MSCIDenmark Capped Investable Market Index
- which has a Zacks ETF Rank of 2 or 'Buy' rating (read: all the
).EDEN is the only ETF available, offering investors an exposure
Though rather unpopular with just $18.5 million in AUM, the
fund has returned a stellar 39.53% in 2013, ranking among the top
three best performing funds in the Europe equities ETF space. In
fact, the fund is one of the best performing global ETFs of
The Danish ETF uses a passive strategy and seeks to match the
price and yield performance of the MSCI Denmark IMI 25/50 Index,
before fees and expenses. The index uses a capping methodology to
limit the weight of any single component to a maximum of 25% of
Holding 38 securities in its basket, the product does not
offer wide diversification to its investors, as it allocates
nearly 65% of the assets in the top 10 holdings.
However, the fund is comparatively less volatile because it
primarily invests in large caps (63%), while 17% of the fund is
allocated to mid caps. (see
all European Equity ETFs here
Novo Nordisk - the top spot in the basket - alone captures
more than one fifth of total portfolio assets, while the next two
spots - Danske Bank and AP Moeller-Maersk- make for a combined
From a sector look, the fund is skewed towards the healthcare
sector with a 38.54% share, followed by industrials (26%) and
The fund has returned around 10% in the past month.
Want the latest recommendations from Zacks Investment
Research? Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
ISHARS-MS DNMRK (EDEN): ETF Research Reports
To read this article on Zacks.com click here.
Want the latest recommendations from Zacks
Investment Research? Today, you can download 7 Best Stocks for
the Next 30 Days. Click to get this free report