Tag: Exchange-traded fund

Italy ETF Thrives After Controversial Election

Italy ETF Thrives After Controversial Election

In a sign that global populism has not died, the anti-euro 5-Star Movement proved popular among voters in southern Italy.
While the results of Italy’s election did not produce an official governing regime and can be seen as controversial to outsiders, the iShares MSCI Italy Capped ETF (EWI ), the largest Italy exchange-traded fund (ETF) trading in the U.S., is up 3.63% since the election.
(See also: Top 4 ETFs to Track European Stocks in 2018.)
The ETF’s performance is intimately tied to that of the Italian banking sector, as EWI allocates nearly 36% of its weight to financial services stocks.
Investors considering EWI should be mindful of any increase in political volatility because Italian stocks are already more volatile than broader European benchmarks.
EWI has a three-year standard deviation of 18.91% compared with 12.99% on the MSCI Europe Investable Market Index.
(For more, see: Reducing Volatility With Europe ETFs.) “Heightened political squabbling threatens to tilt back recently improved business and consumer confidence, which has stood up well to stagnant real wage growth, higher than normal unemployment and uncertain job security,” said Markit. “Nevertheless, the immediate impact on the economy is likely to be moderate, with political gridlock mitigated by low sovereign and private borrowing costs, alongside Italy continuing to exploit strong economic conditions across the Eurozone and the global economy.”
Since the start of March, the $725 million EWI has not added or lost any assets.