Tag Archives: consumer

5 China ETFs Up At Least 20% In Q4

Though the Chinese economy and securities have seen the height of volatility so far this year, the final quarter of 2015 seems quite steady, rather upbeat. This is quite a different picture from Q3 backed by compelling valuation after a bloodbath in August following currency devaluation and several cool economic data. China started to recoup losses from October with its A-Shares ETFs once again seeing runaway success in November. Apart from cheaper valuation, plenty of policy easing to jumpstart its ailing economy and hopes for further easing (as the economy is still reeling under pressure) helped Chinese equities ETFs to rule the top-performers’ list in the quarter-to-date frame (as of December 3, 2015). In October, China reduced the key interest rates by 25 bps, which marked the sixth slash since last November. Not only monetary policy easing, Beijing went on to enact a demographic reform and put an end to the country’s decades-long infamous one-child policy. Investors should note that China has long been working on stepping up domestic consumption, shedding focus on exports and intending to move to a ‘slower and more balanced growth’ economy. If this was not enough, the Chinese currency, the yuan, received a privileged reserve currency status from the IMF recently and joined the league of the major currencies, namely U.S. dollar, pound, euro and yen. China’s currency will have a weight of 10.92%, higher than the yen (8.33%) and the pound (8.09%), in IMF’s reserve currency basket from October 2016. As per the IMF, the step was the outcome of reformative measures presently being undertaken in China, which gives the “freely usable” tag to the yuan. It’s not that China investing is devoid of glitches. In fact, news about the Chinese securities regulators being stricter in their investigation into brokerages led the country’s stocks to suffer the deepest plunge on November 27 since the August uproar. Still, relentless constructive measures by regulators have saved China equities every time. One of China’s latest measures to calm the jittery market will be to launch a “circuit breaker ” on a benchmark stock index of the country next year. Per the new norm, a 5% one-day gain or loss in the CSI300 index (before 2:30 p.m.) would close trading in the country’s all equity indices for 30 minutes. Shifts of over 7% would result in closed trade for the rest of the day. In such a backdrop, investors might want to know about the top-performing China ETFs so far in Q4. For them, we highlight five Chinese equities ETFs that are still up at least 20%. KraneShares CSI China Internet ETF (NASDAQ: KWEB ) – Up 30.2% This product provides concentrated exposure to the Chinese Internet market by tracking the CSI China Overseas Internet Index. In total, the fund holds about 60 securities in its basket. The ETF has amassed $154.4 million in AUM and charges 71 bps in annual fees from investors. P owerShares Golden Dragon China Portfolio ETF (NYSEARCA: PGJ ) – Up 27.7% The $185 million ETF holds about 77 securities. The expense ratio of the fund is 0.70%. The fund is heavy on IT (46.4%) and Consumer Discretionary (38.2%). As far as individual holdings are concerned, Ctrip.com (NASDAQ: CTRP ) takes the top position with a 10.27% weight followed by NetEase (NASDAQ: NTES ) (9.8%) and Baidu (NASDAQ: BIDU ) (9.0%). Guggenheim China Technology ETF (NYSEARCA: CQQQ ) – Up 27.3% This fund targets the overall technology sector in China and follows the AlphaShares China Technology Index, holding 76 stocks in its basket. Alibaba dominates the fund’s return with a 21.5% share while other firms hold no more than 9.4% of assets. In terms of industrial exposure, about 65% of the portfolio is allotted to Internet mobile applications while electronic components and semiconductors round off to the next two spots. The product manages an asset base of $58.4 million. The expense ratio comes in at 0.71%. KraneShares CSI New China ETF (NYSEARCA: KFYP ) – Up 24.1% This fund tracks the CSI China Overseas Five-Year Plan Index, holding about 140 securities in its basket. About one-third of the portfolio is skewed towards Consumer Discretionary, closely followed by Information Technology. The fund is unpopular as depicted by its AUM of $3.2 million. The expense ratio comes in at 0.71%. Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap ETF (NYSEARCA: ASHS ) – Up 22.4% This product is a combination of China A-shares and smaller capitalization. This ETF attempts to replicate the performance of the CSI 500 index, which tracks 500 small cap companies on the Shanghai and Shenzhen stock exchanges. This $35.8 million fund charges 80bps in fees. Industrials (24.3%) and Consumer Discretionary (15.9%) are the top two sectors. Link to the original post on Zacks.com

5 ETFs For Loads Of Holiday Shopping Delight

The holiday season saw a gala start on an e-commerce bonanza. Smartphones and special deals on apps took charge of the shopping scene, with brick-and-mortar retail sales clearly losing steam. The Thanksgiving weekend, Black Friday and especially Cyber Monday demonstrate the growing popularity of mobile shopping and changing consumer habits. Further, strengthening of U.S. economic activities and a slew of upbeat economic data, especially on the job, auto and housing fronts, provide strong support to the holiday season, though consumer confidence has been shaky. Recap of Thanksgiving Weekend and Cyber Monday According to RetailNext, brick-and-mortar sales fell 4.7% to $20.4 billion over the four-day Thanksgiving weekend, while it dropped 10.4% year over year, as per ShopperTrak. Meanwhile, online sales grew 25.2% year over year during the weekend, as per IBM, and 25% on Thanksgiving Day and 14% on Black Friday, with combined sales of $4.45 billion, as per Adobe. After a massive surge in online sales on Black Friday, Cyber Monday once again became the heaviest online spending day ever, exceeding over $3 billion in sales for the first time. Online sales jumped 21% from last year and hit $3.12 billion for the first time, as per web analytics firm ComScore . Total online spending climbed 15% to $11 billion from Thanksgiving Day through Cyber Monday (November 26 to 30), according to Adobe. Most of the spending came from mobile devices, suggesting that mobile shopping is on the rise. Sluggish Consumer Sentiment The Consumer Confidence Index measured by the Conference Board – a barometer of the U.S. consumer health – dropped to its lowest level in a year to 90.4 in November from a revised 99.1 in October. On the other hand, the Thomson Reuters/University of Michigan index of consumer sentiment increased to 91.3 for November from 90 in October. The number was well below the Wall Street Journal expectation of 93.0 and preliminary reading of 93.1 recorded in mid-November. This shows that retailers might struggle to win customers this holiday season. U.S. on Track to Modest Growth Amid sluggish consumer confidence, the U.S. economy is showing impressive growth after a lazy summer. Though the manufacturing sector shrank for the first time in three years in November on a weak global economy and a strong dollar, robust automobile sales and construction spending suggest the economy is on a firmer footing. This is especially true as the economy expanded at a solid clip of 2.1% annually in the third quarter, up from the initial estimate of 1.5%, and was followed by 3.9% growth in the second quarter. The solid growth was driven by cheap fuel and greater job security. Hiring came in stronger than expected for November, reflecting back-to-back months of job growth. In particular, the economy added 211,000 jobs in November, much above the market expectation of 200,000, and unemployment remained at a seven-and-half year low of 5%. Further, the pace of hiring in October and September was stronger than previously expected. Average hourly wages rose by four cents last month, following a nine-cent increase in October. Apart from these, a gradual recovery in the housing market as well as stepped-up service activities are propelling the U.S. economy, setting the scene for a decent holiday season. As a result, the National Retail Federation (NRF) expects total holiday sales in November and December (excluding autos, gas and restaurant) to grow at a solid pace of 3.7%. Though this marks a deceleration from last year’s growth rate of 4.1%, it is well above the 10-year average of 2.5%. Online sales are projected to grow 6-8% to $105 billion. As per research firm Forrester, consumers will spend $95 billion this year, up 11% from last year, with mobile shopping playing a crucial role. ComScore expects online sales to jump 14% year over year to $70.06 billion for the full holiday season (November and December), outpacing the growth of brick-and-mortar retail sales. ETFs to Buy Given holiday optimism and a digital shopping boom, stocks and ETFs in the Internet and consumer space look poised for solid gains this month. Investors could tap this opportunity in a diversified way with the help of following ETFs. Each of these products have a solid Zacks ETF Rank of 1 (Strong Buy) or 2 (Buy), and have retuned handsomely over the past 10 days, making them compelling for the holiday season (see all the Consumer Discretionary ETFs here ). Market Vectors Retail ETF (NYSEARCA: RTH ) This fund provides exposure to the retail segment of the broad consumer space by tracking the Market Vectors US Listed Retail 25 Index. It holds about 26 stocks in its basket, with AUM of $142.2 million, while the average daily volume is light at around 75,000 shares. Expense ratio came in at 0.35%. It is a large-cap centric fund, and is heavily concentrated on the top firm Amazon (NASDAQ: AMZN ) with 14.6% share, closely followed by Home Depot (NYSE: HD ) at 8.4%. Sector-wise, specialty retail occupies the top position with 29% share, followed by a double-digit allocation each to Internet and catalogue retail, hypermarkets, drug stores, and healthcare services. The product has added 3.8% over the past 10 days and has a Zacks ETF Rank of 1. SPDR S&P Retail ETF (NYSEARCA: XRT ) This product tracks the S&P Retail Select Industry Index, holding 104 securities in its basket. It is widely spread across each component, as none of these holds more than 1.36% of total assets. Small cap stocks dominate about two-thirds of the portfolio, while the rest have been split between the other two market cap levels. In terms of sector holdings, apparel retail takes the top spot with 21.7% share, while specialty stores, automotive retail, and Internet retail also have double-digit allocation each. XRT is the most popular and actively traded ETF in the retail space, with AUM of about $714 million and average daily volume of more than 4.1 million shares. It charges 35 bps in annual fees and has gained 3.3% over the past 10 days. The fund has a Zacks ETF Rank of 1. PowerShares Nasdaq Internet Portfolio ETF (NASDAQ: PNQI ) This fund follows the Nasdaq Internet Index, giving investors exposure to 94 Internet stocks. It is moderately concentrated on the top 10 holdings, with Amazon, Alphabet (NASDAQ: GOOGL ) and Facebook (NASDAQ: FB ) taking the top three spots in the basket, with at least 8% share each. Internet software and services makes for nearly 56% share in the basket, while Internet and catalog retail takes 39% share. The product has amassed $260.8 million in its asset base, while trades in lower volume of about 25,000 shares per day, on average. Expense ratio came in at 0.60%. PNQI added about 3% in the same time frame and has a Zacks ETF Rank of 2. PowerShares DWA Consumer Cyclicals Momentum Portfolio ETF (NYSEARCA: PEZ ) This product targets the broad consumer space by tracking the DWA Consumer Cyclicals Technical Leaders Index. It holds 38 stocks having positive relative strength (momentum) characteristics, with none holding more than 5.4% of assets. This approach results in a large cap tilt at 43%, followed by 33% in mid caps and the rest in small. About 29% of the portfolio is dominated by specialty retail, while hotel restaurants and leisure, textiles apparel and luxury goods, and airlines round off the next three positions with double-digit exposure each. The fund has managed $274.5 million in its asset base, while it trades in lower average daily volume of 57,000 shares. It charges 60 bps in annual fees, and has added about 1.7% over the past 10 days. The fund has a Zacks ETF Rank of 1. First Trust Consumer Discretionary AlphaDEX ETF (NYSEARCA: FXD ) This follows an AlphaDEX methodology and ranks stocks in the consumer space by various growth and value factors, eliminating the bottom-ranked 25% of stocks. This approach results in a basket of 129 stocks that are well spread out across each security, with none holding more than 1.7% of assets. About 50% of the portfolio is focused on mid cap securities, with specialty retail being the top sector, accounting for nearly one-fourth of the portfolio, closely followed by media (16%). FXD is one of the popular and liquid ETFs in the consumer discretionary space, with AUM of $2.4 billion and average daily volume of 462,000 shares per day. It charges a higher 63 bps in annual fees and has gained 1.5% over the past 10 days. The product has a Zacks ETF Rank of 1. Original Post

The iShares MSCI Ireland Capped ETF: Ireland Revisited

Ireland is generating growth well in excess of its fellow Eurozone member states. Ireland employed a corporate ‘tax haven’ strategy, at 12.5%, in order to attract foreign investment. Many global, best in class companies now officially headquarter in Ireland. Ireland had been bestowed with the title “Celtic Tiger” and it has been well earned. During the worst of the EU recession years, 2008 through 2010, Ireland’s GDP contracted over 14% . Ireland, however, was not alone in its struggle to revive its economy. With few exception, advance economies around the globe were struggling; some on the very brink of complete economic collapse. In response, the Irish government jumped aboard the ‘austerity bandwagon’, raised taxes, reduced public sector spending and requested nearly $90 billion in bailout funds from the EU. The persistence has paid off. Over the past two years, the Celtic Tiger roared back with a vengeance. According to the European Commission , Ireland’s 2014 GDP growth was 5.2% with year over year inflation of 0.3% and debt to GDP of 107.5%. For 2015, it is expected that Ireland will have 6.0% growth with year over year inflation of 0.3% and a debt to GDP ratio of 99.8%. Over the past two years, unemployment has gone from 11.3% to 9.5%. The forecasts are equally impressive with 2016 GDP growth expected to be 4.5%, unemployment at 8.7% and debt at 95.4% of GDP. One of the cornerstones of Ireland’s recovery is the low corporate tax rate at 12.5%. Finance Minister Michael Noonan intends to reduce it again by half, to 6.25%. Recently, the pharmaceutical giant Pfizer (NYSE: PFE ) , acquired Ireland based Allegan in order to reestablish Pfizer’s corporate headquarters in Ireland and take advantage of the low tax rate. Spain’s pharmaceutical giant Grifols (NASDAQ: GRFS ) has also ‘taken the leap’. Ireland’s Knowledge Development Box , which includes the favorable tax rate, has attracted other global giants such as Medtronic (NYSE: MDT ) , Horizon Pharma (NASDAQ: HZNP ) , Endo (NASDAQ: ENDP ) , Pentair (NYSE: PNR ) and a host of others. The most recent data indicates that US companies now employ over 140,000 citizens of the Irish Republic. To be sure, all is not perfect with the Irish economy. Aside from those positive projections, the European Commission has made observations and recommendations which Ireland needs to address, including, “…High level of private and public debt …” as well as “…Financial sector vulnerabilities…” The European Commission has determined that these issues, among others, require “…decisive policy action and specific monitoring…” So it seems that, so far, the Irish economy has continued to outperform the rest of Europe, is aggressively pursuing major global corporations with its low corporate tax and R&D tax credit policy, however, the country still has concerning macroeconomic issues. So is it worth the risk to hold a piece of the Emerald Isle in your portfolio? If so, you’re limited in your choices. BlackRock ‘s (NYSE: BLK ) iShares portfolio has the best possible venue with its MSCI Ireland Capped ETF (NYSEARCA: EIRL ) . According to iShares, the fund is over 87% invested in Ireland, the rest in the UK, US and a wee bit in ‘other’. It’s important to note something here. The fund concentrates on the EU member: Republic of Ireland . Northern Ireland is a constituent part of the United Kingdom. Also, Northern Ireland’s Finance Minister has recently announced a ‘tax matching’ corporate tax rate reduction of 12.5% hoping to make that economic region of the United Kingdom a competitor for direct foreign investment. This bodes well for the fund since, as the pie chart below demonstrates, includes UK based company exposure . Data from iShares It’s also interesting to take note of the fund’s sector allocations. Interestingly, the heaviest allocation belongs to the Materials sector, which is usually very sensitive to the business cycle. This is followed by the more defensive Consumer Staples, then Financials and then Industrials. Healthcare and Consumer Discretionary middleweights follow. The observant investor may notice that many global pharmaceutical or healthcare companies have reestablished themselves in Ireland. It should be emphasized that as well as the 12.5% corporate tax credit, Ireland offers a 25% Research & Development tax credit ; R&D is a major expense for pharmaceutical companies. Data from iShares Before examining the individual fund holdings it’s a good idea, as always, to know a bit about the index the fund is tracking. In this case it’s the Morgan Stanley Capital International ” All Ireland Index “. The fund is a ‘Regulated Investment Company’ subject to an IRS ‘capping’ requirement so that .. .at the end of each quarter of a RIC’s tax year no more than 25% of the value of the RIC’s assets may be invested in a single issuer and the sum of the weights of all issuers representing more than 5% of the fund should not exceed 50% of the fund’s total assets… The fund is small, even by single country focused fund standards, with only 24 holdings. The net assets totaling approximately $170,027,303.00 and has 4.2 million shares outstanding. The 3 month average daily volume is good for a small fund and more than adequate for a retail investor to enter or exit a position. (click to enlarge) The question then becomes, is there a proverbial “pot o’ gold” at the end of the rainbow? In order to answer that, it’s necessary to look a little deeper into the fund’s holdings. Materials 25.90% Ticker Fund Weight Market Cap (in USD Billions) Dividend Yield P/E Ratio Price to Cash Flow Avg. 5 year Dividend Primary Business CRH Plc CRH 22.0086% $24.266 2.33% 35.58 17.74 3.45% Building Materials; global product distribution; minority ownership in Yatai Building Materials; 50% joint venture with My Home Ltd ., India Smurfit Kappa Group Plc. OTCPK:SMFTF 3.8954% $6.283 2.38% 19.69 8.64 NA Paper packaging products, container board, corrugated containers, etc. European, US and Central Americas Averages 12.95% $15.27 2.36% 27.635 13.19 *2.54% *Industry Average Data from Reuters, Yahoo! Finance Surprisingly, for such a large sector allocation, there are only two holdings and then almost 85% of that in just one company, CRH Plc. and maybe for good reason. CRH qualifies for an NYSE-ARCA listing. CRH does have global reach and services across the entire spectrum of building materials through two segments: Heavyside materials for major construction, Lightside materials for smaller projects. CRH is a good example of the type of cross-border reach of an Ireland based company. CRH has 18,400 employees in 44 US states in 1200 US locations. CRH is also established in Brazil and Canada, not to mention Europe. However, as well established and global as it is, building materials are still subject to business cycles. Consumer Staples 24.2233% Ticker Fund Weight Market Cap (in USD Billions) Dividend Yield P/E Ratio Price to Cash Flow Avg. 5 Year Dividend Primary Business Kerry Group Plc OTCPK:KRYAF 12.3368% $13.804 0.62% 25.16 19.73 0.91% Ingredient and flavor products in food, beverage and Pharma. Primarily in the EU Glanbia Plc OTC:GLAPF 4.0275% $5.396 0.66% 31.96 22.52 1.11% Performance, nutritional, vitamin/mineral premixes; Dairy and non-dairy products C&C Group Plc OTCQX:CCGGY 3.8715% $1.31 3.16% **16.41 **12.83 2.16% Hard cider, beer, wine and soft drinks; over 15 brand; UK, EU, US and Canada, Asia, Australia Origin Enterprises Plc OTC:ORENF 2.9352% $0.972 2.87% 11.98 9.88 2.87% Agricultural products and agronomy services in UK, Poland, Romania, Ukraine Total Produce Plc OTC:TTPPF 0.5455% $0.482 1.78% 16.00 8.07 3.21% Fresh produce, flowers, vitamins, minerals, health foods in UK, Scandinavia, Poland, Czech Republic Fyffes Plc OTCPK:FYFFF 0.4448% $0.480 1.61% 11.03 8.85 3.30% Tropical produce distributer, warehouses in Florida, UK, Germany; holds 40% of Balmoral Land Holdings Donegal Investment Group DGICA 0.062% $0.060 2.81% 31.76 17.37 3.64% Farm and dairy supplies, seeds and products; Specialty dairy and vegetable products Averages 3.46% $3.21 1.93% 20.614 14.18 2.46% **Approximate Data from Reuters, Yahoo! Finance Again, it seems that about 50% of the Consumer Staples sector is weighted by one company, Kerry Group Plc . This company occupies a niche in consumer products, through food additives for taste and nutrition, including enzymes, probiotics, specialized proteins and ‘life staged nutrition’ products. Kerry Food Brands include popular European brand names such as Dairygold , Richmond , Wall’s and more. Lastly, Kerry’s agribusiness focuses on sustainability, dairy input products and feeds. Kerry Group distributes in over 140 countries. A quick glance at the entire table demonstrates that this is one of the stronger segments of the fund, with its focus on agriculture, nutritional additives and beverages. Financials 17.3355% Ticker Fund Weight Market Cap (in USD Billions) Dividend Yield P/E Ratio Price to Cash Flow Avg. 5 Year Dividend Primary Business Bank of Ireland OTCPK:IREBY 10.0582% $12.042 *2.27% 12.50 10.98 *1.97% Retail financial services, foreign exchange and hedging products, life assurance Green REIT Plc OTCPK:GREEF 3.4012% $1.10 1.04% 6.57 *18.18 *3.07% REIT: primarily Irish commercial real estate investment company; office, industrial and retail space Hibernia Plc OTCPK:HIBRF 3.3854% $1.002 0.86% 6.79 *18.18 *2.92% REIT: Irish commercial real estate investment company, commercial and residential IFG Group Plc OTC:IFGPF 0.2662% $0.256 2.56% 98.37 *37.52 *1.91% Financial services management, insurance. Pensions, wealth mgmt., financial advisors FBD Holdings OTC:FBDHF 0.2245% $0.254 4.89% *18.51 *13.66 3.78% Insurance underwriting farm and non-farm business. Retail insurance, pension and investment mgmt. Averages 3.47% $2.93 *2.32% *28.548 *19.704 *2.73% *Indicates data was not available; industry average included for comparison Data from Reuters, YaHoo! and Multiple Sources It should be emphasized that the financial holdings are probably the most sensitive area in the fund. As noted above, the European Commission has voiced its concerns about public sector debt. Recently, the Irish Times reported Ireland’s ‘shadow banking’ debt amounted to approximately $2.36 billion. The shadow banking sector includes other entities such as investment funds. Irish banks will undergo an EU stress test in February. On the other hand, it’s also fair to note that the Irish banking sector has seen more difficult times and have survived through them all. Industrials 17.2922% Ticker Fund Weight Market Cap (in USD Billions) Dividend Yield P/E Ratio Price to Cash Flow Avg. 5 Year Dividend Primary Business Kingspan Group Plc. OTC:KGSPF 4.7023% $4.637 0.72% 31.84 22.92 1.28% Energy usage reduction systems and solutions. Water recycling and renewable energy solutions Ryan Air Holdings RYAAY 4.687% $20.869 4.28% 13.76 10.00 *0.23% Well known and popular discount airline serving UK, Europe, Morocco Grafton Group Plc OTCPK:GROUY 4.0124% $1.07 1.68% 17.40 **31.37 *2.67% DIY home improvement and building materials and supplies; home and garden products Irish Continental Group OTC: IRCUF 3.7035% $1.027 2.03% 14.36 11.34 4.63% Maritime freight and passenger ferry services; High speed ferry services CPL Resources Plc OTCPK:CPGLF 0.187% $0.205 1.52% 15.80 15.19 1.66% Placement/Employment services; workforce mgmt., temps, contract, outplacement and training Averages 3.46% $5.56 2.05% 18.63 18.16 2.09% *Indicates data was not available; industry average included for comparison. **Approximated Data from Reuters, YaHoo! and Multiple Sources The Industrial holdings have a more evenly distributed weighting, the most notable one being the successful discount airline, Ryanair . Here in the states, companies such as Home Depot (NYSE: HD ) and Lowes (NYSE: LOW ) have proven themselves as less sensitive to the business cycle. Grafton is a similar company with 37 DIY retail stores in Ireland as well as 313 branches under different brand names in Great Britain and Europe. Grafton also manufactures building materials such as plastic piping and mortar mixes. Health Care 8.5191% Ticker Fund Weight Market Cap (in USD Billions) Dividend Yield P/E Ratio Price to Cash Flow Avg. 5 year Dividend Primary Business UDG HealthCare Co Plc OTC:UDHCF 4.3235% $1.959 *0.84% 6.45 12.77 *1.01% Healthcare outsourcing services provider; supply chain services, event mgmt. UK, N America and Europe Icon Plc. ICLR 4.1956% $4.293 *0.48% 22.25 16.13 *0.51% Clinical trial services for pharmaceutical, biotech, medical device industry Averages 4.26% $3.13 *0.66% 14.35 14.45 0.76% *Data not available; Industry Average for comparison Data from Reuters, YaHoo! and Multiple Sources What might be the deciding factor for owning the fund is the Health Care sector. Presently, the fund holds two equally weighted companies. However, as noted above, the aggressive corporate tax rate and R&D tax credit have attracted global Health Care companies to reestablish corporate headquarters in Ireland . Any complicated legal issues aside, these companies, Pfizer, Medtronic, Horizon Pharma and Grifols are perfectly good candidates for the fund. In general, as long as the ‘Knowledge Development Box’ policy continues to attract global leaders, it’s not too far-fetched to expect some kind of allocation of those newly established companies in the fund. It isn’t a given, but shouldn’t be ruled out. Discretionary, IT and Energy Ticker Fund Weight Market Cap (in USD Billions) Dividend Yield P/E Ratio Price to Cash Flow 5 Year Dividend Growth Primary Business Paddy Power Plc. (Consumer Discretionary) OTC:PDYPF 6.1526% $5.581 1.44% 36.39 25.30 1.82% Consumer Discretionary: betting and gaming services and management; UK and Australia and global online access Datalex Plc (NYSE: IT ) OTC:DLEXF 0.2534% $0.236 0.91% 101.55 30.41 0.95% Travel industry digital solutions; e-business services and consulting San Leon Energy (Energy) OTCQX:SLGYY 0.0471% $0.016 NA NA NA Na Oil and gas exploration; N Celtic Sea, France, Poland, Carpathian Basin Data from Reuters, YaHoo! and Multiple Sources The smaller holdings consisting of one company each; Consumer Discretionary , IT and Energy comprise about 6.4% of the fund, and 95% of that weighted by Paddy Power . This is not the energy holding as the name might suggest, but rather a venue for sports betting including internet and live betting. The investor should make note that internet sports betting laws in the US are regulated state by state and Federal law enforcement is constantly monitoring for illegal offshore betting activities. That being said, online sports betting, and sports betting itself is wildly popular in Europe. Lastly, San Leon Energy is an independent oil and gas exploration company. It suffices to note that its weighting is a mere 0.0471% of the fund. All told and in spite of its shortcomings, the fund has proven itself over the past several years. However, the fund seems out-of-step with the new entrants in the Irish economy. This may be more of a result of the tracking index. MSCI’s Investable Market Methodology of the funds objectives and inclusions states that: …Each company and its securities (i.e., share classes) is classified in one and only one country, which allows for a distinctive sorting of each company by its respective country… …Securities may be represented by either a local listing or a foreign listing…The security’s foreign listing is traded on an eligible stock exchange.. ” It may be a technicality for the present, for the present, but it will be difficult to ignore the fact that many global, major league, publicly owned companies have established corporate headquarters in Ireland. However, even without the inclusion of the recently relocated companies, as long as the economy performs well, foreign investment on this scale is certain to be a driving factor for the economy and supportive of its weakest sectors. Hence the fund is likely to benefit either directly or indirectly from foreign capital investment. It should be noted that the fund’s expense ratio is a mere 4 basis points above the industry average .044%, and recently is trading at a discount to net asset value. The fund’s P/E is 21.90 and price to book multiple is 2.51. The annualized distribution yield is 2.39%; trailing 12 month yield at 1.56% and after expense (SEC) yield is 1.09%. Also, the fund has low volatility with a beta of only 0.80% of the market and is passively managed. Returns Comparison 1 Year 3 Years 5 Years Since 5/5/2009 Inception Total Return 14.22% 21.39% 16.23% 12.41% Share Price 15.77% 22.08% 16.67% 12.67% Index 15.24% 22.35% 16.71% 12.96% Data from Reuters, YaHoo! and Multiple Sources Generally, the fund has potential for capital appreciation, as it is now, however, with the potential of having the future inclusion of the global giants that now call Ireland home, the potential is even greater. Like any investment, it’s a rainbow to follow, but one that just might have a pot o’ gold at its end. Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.