ETFs Christopher Columbus Would Favor (EWI, SPY, SEA)
In honor of the 1492 discovery of America by Christopher Columbus (many will dispute this), we are celebrating a day in his honor.
The explorer would definitely have taken his riches and put it in the stock market if he were around today. So where would the sea-faring explorer invest his money?
iShares MSCI Italy ETF (NYSE: EWI)
Columbus was born in Italy in 1451 and there is no doubt he would have wanted to invest some money in his home country. The ETF has struggled the since the financial crisis began in 2007 and it remains down 58 percent from its all-time high.
That being said, a rally over the last few months has the ETF up 13 percent this year and it closed out last week at the best price in over two years.
The financials and energy make up over half of the ETF with the top holding accounting for a whopping 18 percent. ENI SPA (NYSE: E) is a major oil and gas company based in Italy and is the number one holding.
The basket of 24 stocks pays an attractive dividend yield of 2.97 percent and charges an annual expense ratio of 0.50 percent. The fact the ETF has been lagging could be a positive if the European stocks continue to catch up with their global peers.
SPDR S&P 500 ETF (NYSE: SPY)
Credited with discovering the new world, it would only seem appropriate that the explorer invest some money in America. The SPY is often considered the benchmark of the U.S. stock market because it is composed of the country’s 500 largest publicly traded companies.
The ETF is on pace for a great year, currently up 19.5 percent in 2013.
Apple (NASDAQ: AAPL) andExxon Mobil (NYSE: XOM) are the two largest holdings in the ETF, making up 5.5 percent of the allocation. The remainder of the stocks are fairly even spread between a number of sectors, creating diversification.
Along with diversification, another of the attractive features of SPY is the low-cost expense ratio of 0.09 percent. SPY is often the first ETF an investor will purchase to gain exposure to the U.S. stock market.
Guggenheim Shipping ETF (NYSE: SEA)
Of course an explorer would be interested with investing in shipping stocks. Even though the large ships today that transport commodities around the globe differ greatly from the Santa Maria, Columbus would still be interested.
The ETF is composed of 26 shipping stocks that are directly tied to moving goods around the world.
The ETF is having a solid year with a gain of 23.5 percent, however it still remains 32 percent off the 2010 high. The stocks that make up SEA read like the United Nations.
The U.S. accounts for 22 percent of the ETF, followed by Denmark at 21 percent, and Hong Kong at 14 percent. If the global economy can continue to rebound and the demand for goods in the emerging markets remains solid, expect SEA to continue to rebound into 2014.
Happy Columbus Day!!
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