Although debt problems remain across Europe, many securities in the region have performed quite well this year. In fact, broad ETFs tracking the region such as VGK or EZU have added more than 14% YTD, while they have also outperformed the S&P 500 in the past six months.
Worries over so-called PIIGS nations (Portugal, Ireland, Italy, Greece, and Spain) have significantly declined, and stocks in these nations have actually led the way higher as of late. Due to this sudden bout of optimism and the generally bullish trend, now appears to be a perfect time for Global X to have the debut for its latest international ETF, this time targeting the market of Portugal.
Portugal ETF in Focus
This will actually mark the first time that an ETF issuer has launched a single country fund targeting the relatively small nation of Portugal. The product will trade under the name of the FTSE Portugal 20 ETF—PGAL, and as you might have been able to guess by the name, will hold 20 Portuguese stocks in its basket.
This index focuses on the biggest stocks in the nation (or those that primarily derive their revenues from the country), screening by liquidity and weighting by modified free-float market capitalization. For this exposure, the fund will charge investors 61 basis points a year in fees (read Play a Resurgent Europe with These ETFs).
In terms of the ETF’s holdings, utilities (26.2%), consumer services (22.9%), and financials (15.5%), dominate the basket. However, energy (14.4%) and materials (10.8%) also receive big weights, giving the fund a relatively well spread out profile despite the fact it only has 20 stocks in its basket.
The fund does have a bit of a concentration risk from a single stock look though, as three companies make up at least 13.3% of assets, including EDP at just under 20%. Still, with a heavy focus on utilities and consumer stocks, this product may not be as volatile as it initially appears.