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Wednesday, June 14, 2017

ETFs in Focus on Macron’s Likely Parliamentary Election Win

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President Emmanuel Macron’s centrist party, Republic on the Move, and its ally, MoDem, secured 32.3% votes in the first round of the legislative elections amid concerns over a record low voter turnout of just 49%. Les Republicains and its allies took 21.56% of the votes. The far-right Front National secured 13.2%, while the Socialist Party could bag only 9.5% of the votes. Other parties urged voters to go on to vote in the second round of the elections, in order to avoid a major stronghold and concentration of powers in the hands of a few.

Per projections by Ipsos, Macron’s party and its allies could have between 415 and 455 seats out of the 577 seats in the lower house. If the results are confirmed in the second round of the elections on June 18, 2017, it’ll give a solid majority to Macron which will help him further his policies and plans to redefine France’s economy.

Emmanuel Macron secured presidency with his one-year-old political party. This is reflective of the fact that French people have a changed mindset and are not anymore depending on mainstream parties to tackle issues faced by their country. The French President needs to address multiple issues being faced by the economy. High unemployment, economic growth worries, and high terrorism threats are some of the issues that are perhaps on the top of Macron’s agenda (read: What Makes These Europe ETFs Still Roaring).

The President seems to have adopted an unusual approach given that a majority of his candidates have no prior political experience. In order to tackle his country’s woes, Macron will need a majority in the parliament so that he can carry out his agenda without much hindrance and resistance (read: French Election Soothes Sentiments: ETFs Likely to Benefit).

Let us now discuss a few ETFs focused on providing exposure to the French economy.

iShares MSCI EMU ETF EZU

This ETF is a play on developed European economies using the common currency with a focus on large and mid-cap equities.

It has AUM of $13.01 billion and charges 48 basis points in fees per year. The fund has a 32.29% allocation to France, 29.33% to Germany and 10.87% to Netherlands (as of June 9, 2017). From a sector look, Financials, Industrials and Consumer Discretionary are the top three allocations of the fund, with 19.84%, 15.19% and 13.58% exposure, respectively (as of June 9, 2017). Total SA, Sanofi SA, and Siemens AG are the top three holdings of the fund, with 2.65%, 2.48% and 2.45% exposure, respectively (as of June 9, 2017). It has returned 18.79% year to date and 29.7% in the last one year (as of June 12, 2017). It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

SPDR Euro STOXX 50 ETF FEZ

This fund is appropriate for investors looking to gain diversified exposure to equities of the euro zone.

It has AUM of $3.97 billion and charges 29 basis points in fees per year. The fund has a 35.77% allocation to France, 33.21% to Germany and 10.88% to Spain (as of June 9, 2017). From a sector look, Financials, Industrials and Consumer Discretionary are the top three allocations of the fund, with 22.04%, 14.47% and 11.18% exposure, respectively (as of June 9, 2017). Total SA, Siemens AG, and Sanofi SA are the top three holdings of the fund, with 4.60%, 4.51% and 4.16% exposure, respectively (as of June 9, 2017). The fund has returned 17.66% year to date and 29.45% in the last one year (as of June 12, 2017). It has a Zacks ETF Rank #1 with a Medium risk outlook.

Vanguard FTSE Europe ETF VGK

This fund seeks to invest in developed European economies and is one of the most popular funds in its space.

It has AUM of $17.7 billion and charges 10 basis points in fees per year. The fund has a 29.1% allocation to the U.K, 14.7% to France and 14.5% to Germany (as of April 30, 2017). From a sector look, Financials, Industrials and Consumer Non-Cyclical are the top three allocations of the fund, with 19%, 14% and 13% exposure, respectively. Nestle SA, Royal Dutch Shell Plc, and Roche Holdings AG are the top three holdings of the fund, with 2.5%, 2.2% and 2% exposure, respectively (as of April 30, 2017). It has returned 16.77% year to date and 24.10% in the last one year (as of June 12, 2017). It has a Zacks ETF Rank #1 with a Medium risk outlook (read: What Does UK Hung Parliament Mean for Europe ETFs?).

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ISHARS-EMU IDX (EZU): ETF Research Reports
 
SPDR-EU STX 50 (FEZ): ETF Research Reports
 
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June 14, 2017 at 02:01AM

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