Here's an update on equity ETFs. China still looks the best
value on paper with expected returns over 8%. However as mentioned in previous posts the high weighting of financial stocks in the China 25 fund causes some
concern.
Small cap stocks are looking good value at present with Far
East (ex Japan), Emerging Markets, and Eurostoxx all having small cap funds in
the top 7. In some cases these funds have higher dividend yields than their
large cap counterparts with potentially better growth prospects. Small cap
stocks are obviously riskier but the small cap funds typically include more
companies than their large cap counterparts and weighting on any individual
company is usually small (c. 1%).
Going back to large caps the Eurostoxx 50 and the FTSE100
funds look good value. They pay decent dividends and are seen as low risk. The BRIC
fund follows close behind offering some geographical diversity.
The table below summarises the data:
Name
|
Ticker
|
Div Yield
|
PE Ratio
|
Current Price
|
Initial Target
|
Est. Annual Return
|
China 25
|
FXC.L
|
2.6%
|
9.9
|
6657
|
9046
|
8.3%
|
FE(ex Jap) Small Cap
|
ISFE.L
|
2.1%
|
14.4
|
1632
|
1909
|
6.2%
|
EUROSTOXX50
|
EUE.L
|
4.1%
|
12.8
|
2076
|
2427
|
6.2%
|
FTSE100
|
ISF.L
|
3.5%
|
12.0
|
580
|
668
|
6.0%
|
BRIC
|
BRIC.L
|
2.5%
|
13.3
|
1609
|
1842
|
5.9%
|
EM Small Cap
|
IEMS.L
|
2.1%
|
19.1
|
6214
|
6635
|
5.1%
|
EUROSTOXX Small Cap
|
DJSC.L
|
2.9%
|
16.4
|
1738
|
1784
|
4.7%
|
- · The estimated annual return is based on this formula using the above data.
- · The PE ratio is taken from ishares (US site), Yahoo Finance and etfdb.com.
- · Initial target is a short term target based on the above fundamentals (at this price it would be wise to liquidate and move our capital to potentially better investment opportunities)
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