As Europe Wilts, Don't Eat These BUNS (EWU, EWN, EWP)

Our quest for the best in
international investing acronyms
takes a cautionary turn today to the developed markets side of the spectrum. Are there are legitimate opportunities in the world's developed nations for investors? The answer is "yes" with a "but" as in "Yes, but it depends on what developed markets one is evaluating." The S&P 500 has outperformed an array of developed market benchmark indexes this year, so it's safe to say the U.S. should be on anyone list of industrialized nations to invest in. Analysts also see value in markets such as
Australia and Hong Kong
just name a pair. For better or worse, there are developed markets that, generally speaking, should be avoided over the near- to medium-term and there's a new acronym to help investors remember those countries: BUNS. As in Belgium, the U.K., the Netherlands and Spain. Looks look at the respective ETFs for each.
iShares MSCI Belgium Investable Market Index Fund EWK
The iShares MSCI Belgium Investable Market Index, which is home $26.4 million in AUM, is a curous tale. EWK suffered through Belgium's credit downgrade
in late 2011
but the fund has been solid performer this year. The yield of 4.6% is also inviting, but EWK is a two-sided coin. One side is that Belgium has had its share of political problems, credit downgrades and the fund is sensitive to the fragile state of affairs in the Euro Zone. On the other side, Anhueser-Busch InBev
BUD
accounts for almost 27% of EWK's weight and if that stock performs well, EWK might (emphasis on "might") be insulated a bit from Europe's trials and tribulations.
iShares MSCI United Kingdom Index Fund EWU
How much longer EWU stays positive on the year is up for debate following news from earlier Wednesday that United Kingdom officially entered a double-dip recession, as its GDP fell 0.2% from the fourth quarter of 2011. Other woes exist for EWU in the form of its sector breakdown. Financials account for almost 18% of the fund's weight and investors' appetites for European bank stocks isn't robust at the moment. Energy and materials combine for another 31% of the ETF's weight and while that means high-quality names such as Royal Dutch Shell
RDS
and BHP Billiton
BHP
, that also means EWU needs high-beta stocks to be in favor to generate upside.
iShares MSCI Netherlands Investable Market Index Fund EWN
Home to an AAA credit rating, the Netherlands and EWN had the potential to be safe haven plays amid the drama that is Europe's sovereign debt calamity. There is one clear reason to avoid EWN for the time being: Markets hate uncertainty and markets have a pronounced distaste for political uncertainty, but that's exactly what the Netherlands is home to right now. Then there is the matter of EWN's weak chart. EWN is down 6.3% in the past month, resides below its 20- and 50-day moving averages and barely above its 200-day line.
iShares MSCI Spain Index Fund EWP
Not surprisingly, EWP is the worst performer of the BUNS quartet and that also means a yield trap, er dividend yield of about 10%. The International Monetary Fund said today Spain may need for public funds to bolster its banks and identified 10 Spanish banks as vulnerable regarding bad loans. Don't forget Spain's surging borrowing costs. On Tuesday, the country sold a combined $2.6 billion in 3- and 6-month notes. The yields of 0.63% and 1.58% compare with 0.38% and 0.84%, respectively at the last auction, the Associated Press reported. For more on ETFs with downside potential, please click
HERE
.

Posted In: Long IdeasNewsBondsShort IdeasSpecialty ETFsTechnicalsEventsGlobalEconomicsPre-Market OutlookAfter-Hours CenterMarketsTrading IdeasETFs

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.