Sunday 25 November 2012

Current Top Equity ETFs





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)