Poland managed to avoid the worst of the emerging markets
meltdown due to its lower dependence on hot money as well as
sound macroeconomic structure. Further, it is one of the few
countries in Europe that has been able to weather the economic
crisis in the eurozone. The country's solid economic performance
despite the weakness in many of its neighbors can be attributed
to the internal strength of the economy, and significant reforms
undertaken in the
recent past. (
Poland ETF Investing 101
However, the economy, which survived the four years of economic
crisis, began to show new signs of weakness in 2012. Reduced
government spending along with waning consumer confidence
resulted in slower growth of the economy in 2012. Further, lower
export demand attributable to the deepening crisis in the
Euro-zone also dampened the growth of the economy to some extent.
But the outlook for the economy seems to have changed. With the
eurozone economy reviving, exports from the region are once again
strengthening thereby providing a strong support to the economy.
Exports climbed 6% in the first six months of 2013 (
4 Outperforming ETFs Leading Europe Higher
Moreover, with the increase in export levels, current account
deficit which was one of the major concerns for the economy seems
to have reversed. After 13 years of current account deficit, the
region recorded its first current account surplus. Also,
domestic demand which was undermined by a weak economic outlook
for the main trading partners of the country is now gaining
Besides, improved retail sales and industrial production are
instrumental in getting the economy back into shape.
Further evidence of the improving economic outlook going
forward is Poland's reduction in budget deficit and stabilizing
government debt. The upgrade of the debt rating outlook by Fitch
from stable to positive bears testimony to the same (
European ETFs: A Surge in Popularity
In fact, for 2013, the European Commission once again appears to
be positive on the outlook for the Polish economy. It anticipates
the economy to grow at the rate of 2% in 2013 and 3% in 2014. For
the long term, the economy expects its growth rate to reach 4%.
Following a sharp slowdown in 2012, GDP growth is projected to
pick up as investment and exports recover. Yet reduced consumer
spending and joblessness in particular, remains a matter of
concern for the Polish economy. Unemployment stands at 13%.
iShares MSCI Poland Investable Market Index Fund
Investors seeking a broad exposure to the Polish equity market
might find EPOL an interesting pick (
Poland ETFs Head-To-Head
The product focuses largely on the large cap segment of the
Polish market and holds 43 securities in its basket. The majority
of holdings are classified as blend stocks from a style
The fund is heavily concentrated in its top 10 holdings with
nearly 63.2% of the total assets. The top three companies
combined to make up nearly 32.2% share of the portfolio.
From a sector perspective, the product has a certain tilt towards
the financial sector which makes up 50% of the ETF. Materials and
energy sectors also get double-digit allocation in the fund.
With an AUM of $312.4 million, the product charges 61 bps in fees
per year from investors. The ETF has generated a negative
year-to-date return of 5.31%, indicating that the economy had a
slow start to the year.
Market Vectors Poland ETF (
The fund holds 30 securities in its basket, with a heavy focus on
the top 10 holdings that account for about 60.4% of the assets.
The top three companies take away more than 24.4% of the
In terms of holdings, financials consists of more than one-third
of the holdings followed by double-digit weightings to energy
(15.6%), utilities (12.1%) and materials (10.7%). The ETF has
total assets of $27.5 million. The fund charges a fee of 61 basis
points annually (
Europe ETF Investing
).PLND's year-to-date loss stands at 2.23% .
Poland remains a robust option when compared to many of its peers
in the region as well as other emerging markets. Additionally,
its projected growth rate is far in excess of what many other
economies are seeing in the area, suggesting that Poland could
still be a great option.
It is still one of the strongest performers in the European
Union. The economic strength foreseen in the second half of 2013
could thus boost equities in the nation and make Poland a solid
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ISHARS-MS POLND (EPOL): ETF Research Reports
MKT VEC-POLAND (PLND): ETF Research Reports
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