Tag Archives: middle-east

FDD: Weighing Risk With Return

Top weights ‘best-in-class’ European based global companies. Has traded in a very steady range with steady distributions for over six years. The fund maintains a cyclically sensitive bias, with its heavy weighting on the financial sector. It’s beginning to look as though the “New Normal” will indeed be a new normal for some time to come. With few exceptions, most of the global economy has lost a lot of growth momentum after many years of what seemed like limitless expansion. The most recent Organization for Economic Co-operation and Development (OECD) ‘ Global Economic Outlook ‘ reported that “… A further sharp downturn in emerging market economies and world trade has weakened global growth to around 2.9% this year – well below the long-run average – and is a source of uncertainty for near-term prospects… ” The traditional response to an economic slowdown has always been to increase the amount of cash in the banking system and at the same time lower benchmark interest rates. This in turn lowers consumer and business interest rates. The basic principle behind ‘Quantitative Easing’ is that consumers and businesses would be more inclined to borrow for durable goods, inventory, home buying or home construction and so on, thus creating demand which leads to more hiring. As one might expect, there’s a downside to “QE”. Lowering government benchmark interest rates works its way up the government bond market ladder. So, for example, pension funds will receive lower interest rates when they purchase government bonds which in turn affect their actuarial projections to meet pension payout expectations. Also, when short term savings rates decline, consumers will be less inclined to purchase short term certificates of deposits, hence reducing demand for a popular bank product. Last, but by no means least, is that individual investors will receive smaller distributions from their portfolio’s cornerstone government bond funds. A confluence of events stemming from the credit market collapse in 2008, in addition to the recent economic contraction in the Asia-Pacific region has made most QE programs virtually ineffective. The point of the matter is that the individual investor’s cornerstone fixed income may be safe, but may not contribute meaningfully to the overall portfolio for many years to come. One way to replace the loss of distributions in government bond funds without incurring exceptional risk, is through diversifying among high-quality equity, dividend focused funds. One suggestion would be the First Trust Dow Jones STOXX European Select Dividend 30 Index ETF (NYSEARCA: FDD ) . The underlying index is the STOXX® Europe Select Dividend 30 Index (Zurich: SD3P) which is designed to … track high-dividend-yielding companies, across 18 European countries: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom… The fund provides relatively good return by any standard: a trailing twelve month yield of 4.45% and an SEC yield of 5.02%. The STOXX index itself has a yield of 5.57%. There is a 0.60% net expense ratio which is much higher than the industry average 0.44%. (click to enlarge) The fund was incepted in August of 2007 closing its first day of trading at $30.75. It had declined considerably since then, tracking the STOXX index down over the years closing November 13, 2015 at $12.42. The Price-Dividend History Chart demonstrates that the fund peaked in October of 2007 at $32.26 per share and declined as housing and credit bubbles deflated, dragging global markets down with them. The fund reached its all-time low of $7.75 a share in March of 2009. It recovered by mid-2009 and has since traded in a steady range from $10.86 to $16.04. The pertinent questions investors should ask is, first, whether the fund is able to continue to produce the steady 4.45% distribution and, second, are the returns worth the risk. The best way to answer these questions is to step through the fund’s holdings sector by sector. First, it’s a good idea to understand the fund’s geographical distribution and then its sector allocation. As the pie chart below demonstrates, the fund is heavily weighted in Europe’s top performing economies, in particular, the United Kingdom, Switzerland France and Germany. Data from First Trust Knowing the geographic allocation, it’s now a good idea to chart-out the fund’s sector distributions. Data from First Trust Clearly, the fund is heavily weighted in Financials. Generally, the financial sector is cyclical, that is, it rises and falls with the economy. On the other hand, the second heaviest weight is in Utilities, a non-cyclical sector; it continues to perform regardless of the economy. Similarly Heath Care is non-cyclical, as well as Consumer Staples. Telecom is considered sensitive to the business cycle; however, mobile communications create efficiencies and productivity so Telecom services might not be as sensitive to the business cycle. Similarly, both the Energy and Industrial Sectors are sensitive to the economy, but not nearly as much as Consumer Discretionary or Materials. It seems that overall, the fund is weighted a bit more towards sectors which rise and fall with the economic tide. As to the degree of sensitivity, that would depend on the individual holdings as discussed below. The financial sector includes Europe’s premier banks, insurance and real estate investment. All of these companies are European multinationals and the top weighted funds of this sector have global reach. Three of the 14 holding have payout ratio in excess of 100% of adjusted earning, and those for which no information was available, a percentage of operating cash flow has been substituted. The average yield of the sector is 4.425%. Excluding extreme or absent values, the rough payout ratio average is 70.5%, high but sustainable. Financials 44.92% Symbol Yield Fund Weight Payout Ratio P/E Debt to Equity 5 Year Dividend Growth Rate Primary Business Amlin PLC OTCPK:APLCY 4.14% 5.76% 90.62% 14.37 17.68 6.19% Enterprise insurance and reinsurance Swiss Re OTCPK:SSREY 7.70% 4.28% 71.57% 9.06 33.10 35.92% Reinsurance, property and Casualty Provident Financial OTCPK:FPLPY 2.91% 4.08% 76.59% 26.43 257.46 9.07% Financial services, personal credit and other consumer lending Zurich Insurance OTCQX:ZFSVF 6.46% 3.98% 517% of cash flow 10.30 35.00 4.71% General insurance, consumer and commercial insurance Swiss Prime Site OTC:SWPRF 4.82% 3.31% 89.65% of cash flow 15.05 82.14 1.38% REIT: office and retail Standard Charter OTCPK:SCBFF 1.52% 3.12% 106.85% 14.06 190.27 6.22% International banking, Islamic banking, private and retail services SCOR OTCPK:SCRYY 3.99% 3.09% 26.51% of cash flow 11.39 43.95 6.96% Reinsurance, life, property and casualty, aviation, marine Allianz OTCQX:AZSEY 4.35% 3.02% 46.96% 10.83 53.82 10.81% Holding company for Allianz, insurance and asset management PSP Swiss Property OTC:PSPSY 3.81% 2.64% 88.91% 23.34 47.77 NA Holding company for real estate investment and management Banco Santander SAN 4.68% 2.58% 117.65% 9.19 240.76 0.80% Retail and Private banking; Asset management and insurance Muenchener Rueckversicherung OTCPK:MURGY 4.32% 2.49% 39.18% 9.11 15.73 6.15% Holding company; business and reinsurance, health and asset mgnt Skandinaviska Enskilda Banken OTCPK:SKVKY 5.18% 2.28% 49.68% 11.44 561.00 36.56% Sweden merchant bank; retail, corporate and institutional banking Unibail-Rodamco OTCPK:UNRDY 3.89% 2.26% 42.66% 12.25 87.70 NA French: commercial real estate investment; European shopping centers Baloise Holding OTCPK:BLHEY 4.18% 1.94% NA 9.54 33.03 2.13% Insurance, banking, retirement services Data from Reuters and Yahoo! Finance The Utility sector accounts for four holdings with an average yield of 6.09%. However, the payout ratios indicate that a few of these companies are distributing dividends nearly equal to or in excess of adjusted earnings. Hence it a strange twist, it seems that the financial sector’ dividend distributions are more stable than the utilities. Utilities 14.36% Symbol Yield Fund Weight Payout Ratio P/E Debt to Equity 5 Year Dividend Growth Rate Primary Business SSE Plc OTCPK:SSEZY 5.92% 4.95% 161.35% 27.09 100.33 4.78% UK mainly electric utility; natural gas distribution and storage Snam SpA OTCPK:SNMRF 5.15% 3.82% 19.10% of operating cash flow 13.75 190.00 4.56% Italian natural gas distribution, treatment, management; owns distribution infrastructure United Utilities OTCPK:UUGRY 3.94% 3.62 94.76 24.12 249.98 1.91% UK water and sewage management Fortum OTCPK:FOJCY 9.35% 2.19% 53.88% of operating cash flow 2.60 44.15 5.39% Finland based delivering electricity and heat and related services. Data from Reuters and Yahoo! Finance The Healthcare sector is solid with two world class, well established pharmaceutical companies: Glaxo-Smith-Kline (NYSE: GSK ) and AstraZeneca (NYSE: AZN ) . The holding BB Biotech (OTC: OTC:BBAGF ) is listed by the fund as a ‘materials company’. However, after double checking with several sources, including the company’s home page, it best described as an investment company specializing in Biotech companies. Since the return is a function of the Heath Care sector it seems logical to include this company with the Health Care sector. Health Care 7.36% Symbol Yield Fund Weight Payout Ratio P/E Debt to Equity 5 Year Dividend Growth Rate Primary Business GlaxoSmithKline GSK 5.82% 4.02% 39.40% 6.85 304.36 5.57% R&D pharma, vaccines, consumer health care. A premier global pharmaceutical company; 84 production facilities in 36 countries AstraZeneca AZN 4.36% 3.33% 141.51 47.89 63.10 4.01% R&D biopharmaceuticals for cardio-vascular, oncology, autoimmunity and more. Premier global in over 100 countries BB Biotech BBAGF 4.02% 2.96 15.84 3.75 0.00 125.74 (Labeled as Materials) Investment Company specializing in Biotech seeking researching Alzheimer’s, HIV, Hepatitis C, hypertension, hematology, diabetes and cancers Data from Reuters and Yahoo! Finance Telecommunication Service seems ‘ordinary’; however one holding, Orange (NYSE: ORAN ) qualifies as an NYSE-ARCA listing. Telecoms often have high payout ratios and that seems to be the case here. Telecom Services 7.23% Symbol Yield Fund Weight Payout Ratio P/E Debt to Equity 5 Year Dividend Growth Rate Primary Business Proximus OTC:BGAOF 3.64% 2.78% 7.973% of operating cash flow 22.54 68.78 -11.57% Belgium landline and mobile, telephony, internet and television Orange ORAN 3.82% 2.32% 110.24 46.42 114.76 -11.53% French serves France, Spain, Poland, Africa and Middle East Swisscom SCMWY 4.31% 2.08% 298% of operating cash flow 15.45 185.67 1.92% Switzerland and Italy: enterprise and residential, broadband, television, data, mobile and landline Data from Reuters and Yahoo! Finance The energy holdings are Royal Dutch Shell (NYSE: RDS.A ) and Total (NYSE: TOT ) . Again, both are leaders in every area of energy and with a far reaching global presence. Energy 7.17% Symbol Yield Fund Weight Payout Ratio P/E Debt to Equity 5 Year Dividend Growth Rate Primary Business Royal Dutch Shell RDS.A 7.24% 4.01% 187.27% 107.49 31.26 2.28% Well-to-Distilled Product-to-End Product global Oil and Gas energy company operating in over 70 countries Total TOT 5.63% 3.13% 195.03% 33.42 44.59 0.42% Well-to-Distilled Product-to-End Product global Oil and Gas company operating in over 50 countries Data from Reuters and Yahoo! Finance BAE Systems (OTC: OTCPK:BAESY ) is a well-respected aerospace-defense company often involved in state-or-the-art defense projects, joint U.S. defense projects and is considered as the premier weapons developer of the U.K. Carillion (OTC: OTC:CIOIY ) seems to operate a unique niche as a global support and service provider for ‘public-private-projects’ construction in aviation, commercial, rail, roads, utilities, and other areas as well. Industrials 6.66% Symbol Yield Fund Weight Payout Ratio P/E Debt to Equity 5 Year Dividend Growth Rate Primary Business Carillion CIOIY 5.73% 3.79% 64.23% 12.42 65.38 3.98% Support Services for public-private partnerships, construction in the U.K., Middle East and North Africa BAE Systems BAESY 4.69% 2.73% 93.44% 19.93 156.72 5.08% Aerospace, cyber security, electronics, and defense with divisions in the U.S. and U.K. Data from Reuters and Yahoo! Finance The last table contains combined, the one consumer staple and the one consumer discretionary companies. Consumer Staples and Discretionary Symbol Yield Fund Weight Payout Ratio P/E Debt to Equity 5 Year Dividend Growth Rate Primary Business J Sainsbury OTCQX:JSAIY 4.83% 5.75% 47.5% of operating cash flow NA 49.94 -1.45% UK Consumer Staples: supermarkets and convenience stores, online grocery and general retail good. Also in joint ventures for banking and insurance UBM OTCQX:UBMPY 4.16% 3.52% 76.36 20.42 80.43 -2.52 UK Consumer Discretionary: B2B media and marketing, communications, tradeshows, live events Data from Reuters and Yahoo! Finance All in all, a common thread seems to be that whatever European ‘best-in-class’ companies qualify under the fund’s objective, then they are included in the fund. First Trust lists the fund’s P/E as 13.27, price to book at 1.44, to cash flow, 10.33 and to sales, 0.84. The average 30 day trading volume is 80,874 so it shouldn’t present too much of a challenge to acquire a position. Overall, the fund seems to be well grounded with those premier holdings; however, it does stretch out a bit on the risk curve with others. The argument may be made that European banks have survived the worst of all possible situations and that, although it may take more time they will regain strength. If so, the fund is like to experience share price gains. There’s only one caveat: ECB President Mario Draghi has indicated that the European Central Bank might further weaken the Euro to stimulate growth. This might be balanced out by the strong Great British Pound Sterling and the Strong Swiss Franc. Also, the U.S. Federal Reserve Bank has also indicated that it might increase, slightly, its benchmark rate, hence creating a stronger dollar. This all might affect the fund’s yield by currency translation but, again, that greatly depends on the size of the Fed rate hike. All in all, the fund might not replace the safety of a government bond fund, but risk-wise, it seems to be on par with muni funds and then with a better yield.

Aerospace And Defense ETFs Flying High On Strong Earnings

The U.S. bourses saw the majority of Q3 earnings releases getting over last week with headwinds from Q2 still at play. A combination of Energy sector weakness, dollar strength and global growth uncertainties weighed on the results. 341 S&P 500 members, accounting for 75.5% of the index’s total market capitalization, have so far reported results. Total earnings for these companies are down 1% on 4.9% lower revenues, with 71.3% beating earnings estimates and 42.7% coming in ahead of revenue estimates. Companies struggled to beat lowered top-line expectations, with the ratio of companies beating revenue estimates being the lowest in the recent past. However, instead of ‘extremely weak’, the Q3 earnings picture is shaping up to be about in line with the preceding quarter, which was by itself a weak reporting season. Despite the headwinds, aerospace & defense, a relatively smaller sector within the S&P 500, held up well this past quarter. They have not only reported better-than-expected results but also lifted their views in the past two weeks. The earnings beat ratio of the entire aerospace and defense companies unfolding their Q3 results is a stellar 77.8%. The U.S. defense sector performed well given the elevated geopolitical risk, a recovering U.S. economy and strong commercial sales. Escalating geo-political tensions in Eastern Europe, the Middle East, North Korea and Syria boosted demand for defense products. Further, nations such as India, Japan and South Korea are raising their budgets in order to make their defense platforms up to date. Below we have highlighted in greater detail the earnings of some of the major aerospace and defense companies which really drive this sector’s outlook. Quarterly Earnings in Focus The Pentagon’s prime contractor, Lockheed Martin Corp. (NYSE: LMT ), opened this earnings season with robust third-quarter profits. It reported better-than-expected earnings along with higher revenues, solid margins, and strong cash flows, buoyed by robust sales of its F-35 Joint Strike Fighter. The solid quarterly results have enabled it to lift its 2015 guidance for sales, operating profit, and EPS. Aerospace giant, The Boeing Company (NYSE: BA ), delivered third-quarter 2015 adjusted earnings of $2.52 per share, confidently beating the Zacks Consensus Estimate by 13.5%. Earnings also increased 18% year over year on the back of strong operational performance. Revenues came in at $25.85 billion for the quarter, exceeding the Zacks Consensus Estimate by 4.5% and improving 9% from the year-ago level on solid commercial aircraft deliveries. Boeing raised its full-year earnings outlook to the range of $7.95-8.15 per share from the prior guidance of $7.70-7.90 per share. The company also lifted its revenue guidance for the year to the range of $95-97 billion from $94.5-96.5 billion expected earlier driven by increased commercial delivery outlook. Just after winning a multibillion-dollar contract to build a new U.S. bomber, Northrop Grumman Corp. (NYSE: NOC ) reported solid third-quarter 2015 results with revenue and earnings beating the Zacks Consensus Estimate by 6% and 2.4%, respectively. The maker of the current B-2 bomber and Global Hawk unmanned planes has also increased its profit outlook for the full year. General Dynamics Corp.’s (NYSE: GD ) third-quarter earnings from continuing operations of $2.28 per share topped the Zacks Consensus Estimate by 8.6% and also increased 11.2% from the year-ago period on the back of higher defense orders and solid demand for its Gulfstream airplanes. Revenues of $7.99 billion surpassed the Zacks Consensus Estimate by 3.1%. The company raised its 2015 profit outlook based on Q3 results, higher deliveries of Gulfstream business jets and surging sales at the submarine-building unit. Earnings are expected to be between $8.90 and $9.00 per share for 2015, up from $8.70 to $8.80 projected earlier. United Technologies Corporation (NYSE: UTX ) reported third-quarter adjusted earnings of $1.67 per share, down 2% year over year. However, the figure surpassed the Zacks Consensus Estimate of $1.54. Total revenue decreased 6.0% year over year to $13,788 million owing to the impact of adverse foreign exchange and a decline in organic sales. Revenues also missed the Zacks Consensus Estimate of $14,593 million. The company reaffirmed its 2015 guidance. ETFs to Play All these major aerospace and defense companies and their ETFs have been experiencing a surge in share prices, since their solid third-quarter earnings results and improved outlook. For investors who want to play the sector in order to capture the impressive trend, there are a few aerospace and defense ETFs available. Below, we have highlighted some of the key points regarding them. iShares U.S. Aerospace & Defense ETF (NYSEARCA: ITA ) The fund, tracking the Dow Jones U.S. Select Aerospace & Defense Index, holds 39 securities in its basket with Boeing, United Technologies, Lockheed Martin, General Dynamics and Northrop Grumman being the top five stocks. All of them account for more than one-third of the fund assets. With an asset base of nearly $523 million, ITA is the largest player in this space. The fund trades in moderate volumes of roughly 42,000 shares a day and charges an annual fee of 43 bps per year. The fund was up 4.9% in the last two weeks and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. PowerShares Aerospace & Defense Portfolio (NYSEARCA: PPA ) PPA follows the SPADE Defense Index, with 53 companies involved in the development, manufacturing, operations and support of U.S. defense, homeland security and aerospace operations. Lockheed Martin, Boeing, United Technologies, General Dynamic and Northrop Grumman are among the top 10 holdings and together occupy 30% of total fund assets. The product has managed to garner nearly $238 million in assets so far and trades in an average volume of 36,000 shares per day. It charges 66 bps in annual fees and returned 6.8% in the past two weeks. It currently carries a Zacks ETF Rank #3 with a Medium risk outlook. SPDR S&P Aerospace & Defense ETF (NYSEARCA: XAR ) XAR tracks the S&P Aerospace and Defense Select Industry index, holding a basket of 35 stocks. Boeing, United Technologies, Lockheed Martin, General Dynamics and Northrop Grumman score among the top 10 holdings, with a combined share of 18.6%. This product has attracted an AUM of nearly $147 million and exchanges nearly 35,000 shares in hand per day. It charges 35 bps in fees per year and gained 4.6% in the last two weeks. The fund has a Zacks ETF Rank #3 with a Medium risk outlook. Original Post

The Global X FTSE Greece 20 ETF: Contrary Investing

The Greek economy is in extremely depressed conditions. The Greek economy has the support and backing of the EU and ECB. The support, and investment of the EU might make the risk of investing well worth the potential rewards. The famous Greek philosopher, Plato, once said ” Courage is knowing what not to fear. ” Although one might first imagine bravery in some frightful situation, the words might have just as much impact for the investor. For example, most investors have been steering clear of Greece, perhaps not understanding what’s not to fear. True, Greece has been through some difficult times since the collapse of the credit market in 2008. However, many other European Union members had also stood at the precipice but have since recovered. As it is now, the European Union is still feeling the effects of the deep recession in the years following 2008, but the worst has passed for every EU member, including Greece. Knowing what is not to fear from investing in Greece, begins with realizing that Greece is still an EU member as well as a Eurozone member. There has been no default on Greek sovereign bonds and importantly, the European Central Bank as well as the European Commission as well as the strongest members of the EU, Germany. True, the Greeks have sacrificed much, even though they’ve twice elected a government opposed to harsh austerity practices that would have worsened the already depressed Greek Economy. Less than a year after the headline making financial drama, Greece is standing shoulder to shoulder with fellow EU members, doing its part offering Humanitarian support for the tide of refugees fleeing the war torn Middle East and North Africa. Greece, it seems, is still as much a part of the EU, as it ever was. Currently, the economy has extraordinary high unemployment, homelessness and a lack of private sector investment. The point is that Greece has hit bottom and yet survived. Right now, the Greek economy is being supported by the Greek government as well as the EU. Eventually, private investments will return but regaining foreign investor confidence won’t be quick, nor will it be easy. However, economic tragedies have occurred throughout the world many times in the past century only to be followed by remarkable turnarounds. With that in mind, an investor having established a well-diversified and well-founded portfolio may wish to risk capital in this contrarian motif. The best and probably only way to buy the Greek investible market is through the Global X FTSE Greece 20 ETF (NYSEARCA: GREK ) . The fund is small, but has surprisingly good volume for an obscure investment. The fund inception was in December of 2011 when Europe, as well as Greece suffered a recovery relapse, yet as the price history chart demonstrates, nearly doubled by March of 2014. From 2014 to the present, the fund has given up those gains, and again trades at its inception price. The fund has had annual distribution since inception resulting in a yield of 1.77% after fees and expenses. (click to enlarge) Some of the fund’s investments are unusual; the total number of holdings is a mere 30 when counting cash, liquid U.S. Treasuries, and ADRs and common of the same holdings, separately. Before looking into a sampling of these holding, the funds sector allocations need to be specified. The fund weights Financials the heaviest. This is a key component of future capital appreciation for this fund as the Greek financial sector has contracted as far as it could without banks actually folding. With this weighting in the Financial Sector, as the economy and banks recover, it will reflect in the fund’s market price. The second heaviest weighted sector is Consumer Staples. In spite of being a defensive sector, Greek consumers have been hard pressed with reduced wages or job dislocations. Again, by being so heavily weight in a depressed economy, Consumer Staples will be among the first to reflect improvement in the fund’s price as consumers are better able to afford staple products. Consumer discretionary is third in fund weighting. Again, by the logic of economic recovery, as more and more consumers accrue discretionary Euros and once basic needs are met those Euros will eventually find their way back into the discretionary sector. These three sectors, Financials, Consumer Staples and Discretionary accounts for over 65% of the fund. Bank Holdings Symbol Dividend Payout Ratio EPS 5 Year Growth Total Debt to Equity Price/Book Market Cap ( Billions USD) ROI/ROE National Bank of Greece NBG 0.00% 0.00% -70.50% 67.11 0.29 $4.1146 NA/-3.89 Alpha Bank OTCPK:ALBKY 0.00% 0.00% NA 19.38 0.20 $1.346 NA/-4.42 EuroBank Ergasias OTCPK:EGFEY 0.00% 0.00% NA 14.81 0.10 $0.418 NA/-26.24 Piraeus Bank OTCPK:BPIRY 0.00% 0.00% NA 11.56 0.08 $0.521 NA/-24.65 Grivalia Properties Athens:GRIR 3.67% 43.89% of Cash Flow -0.76 7.30 0.59 $0.767 5.15/5.51 Data from Reuters To be sure, it’s difficult to find positive metrics when examining the Greek private banking system. However, the basic premise is ‘knowing what not to fear.’ As long as the ECB is working with the Greek government and is standing behind the private banking sector, there’s little chance that any particular one would default. Further, such an incident would destabilize the already weak economy. It isn’t impossible, but highly unlikely at this point. It could be argued that the private Greek banking system may replicate Japan’s so called ‘Zombie Banks.’ The difference is that Japan has the world’s third largest economy and stands on its own. Greece, with its small struggling economy has the resources and trade partnerships of European Union. There’s no comparison. If there was ever a single ‘Consumer Staple’ company to hold, it would be Coca-Cola (NYSE: KO ) . In this case the fund holds a Switzerland based Coca-Cola franchise producer of non-alcoholic soft drinks, with the well-known Coca-Cola brand soft drinks. Officially it goes by the name Coca-Cola HBC [LSE: CCH]. The licensed franchise pays 1.65% dividend with a 47.86% payout ratio and a market cap of $3.6 billion USD. The company has real earnings at about $0.41 per share resulting in a P/E of 24.31. The fund’s Consumer Discretionary holdings are a little more diverse. Folli Follie ( OTCPK:FLLIY ) is a global fashion and apparel retailer in over 30 countries with over 900 points of sales. Jumbo ( OTCPK:JUMSY ) specializes in toys, baby items, seasonal items books and stationary. The ‘unusual’ holding in the group is OPAP ( OTCPK:GOFPY ) which translates from Greek as Organization of Football Prognostics . The company provides lottery operation services as well as providing feasibility studies for lottery games. Consumer Discretionary Holdings Symbol Dividend Payout Ratio EPS 5 Year Growth Price/Sales Price/Book Market Cap ( Billions USD) ROI/ROE Jumbo SA Athens:BELA 0.00% 0.00% 5.62% 2.06 1.50 $1.098 11.23/13.60 Folli Follie OTCPK:FLLIY 1.56% 3.75% of Cash Flow 2.09 1.10 0.84 $1.124 9.95/11.20 Opap OTCPK:GOFPY 8.50% 18% of Cash Flow -4.71 0.56 2.30 $2.355 20.20/21.50 Data from Reuters The next largest sector holdings are in Telecom, Materials and Utilities. Hellenic Telecommunication ( OTCPK:HLTOY ) is the Telecom Sector at about 12% of holdings. The company has a market cap of $3.81 billion USD, pays a small dividend of 0.94% and has earnings of $0.24 per share resulting in a P/E of 23.15. The company sells at 1.06 times sales and a rather high total debt to equity ratio of over 100. The company has three segments, long distance, land-line and mobile. It should be mentioned that the Greek government held 10% of the company but divested itself of that to Deutsche Telecom ( OTCQX:DTEGY ) . As far as the materials company holdings, Titan Cement ( OTCPK:TITCF ) is, as the name suggest, a cement manufacturer but also related building materials such as aggregates, cement blocks and dry mortar. Viohalco, [Brussels: VIOH] on the other hand, is a cross border merger of Belgium based Cofidin with Hellenic Copper and Aluminum. Materials Symbol Dividend Payout Ratio EPS 5 Year Growth Price/Sales Price/Book Market Cap ( Billions USD) ROI/ROE Titan Cement OTCPK:TITCF 1.55% 24.30 -24.27 1.22 1.06 $1.411 2.29/3.55 Viohalco Brussels:VIOH 0.00% 0.00% NA 0.17 0.54 $0.490 -1.30/-2.33 Data from Reuters It should be noted in the above two examples that the advantage of EU membership has attracted larger, stronger commercial EU entities willing to risk investing in Greece. Public Power Corp ( OTCPK:PUPOF ) is an electric service provider, generating electricity from Hydro, fossil fuel and renewables. It has two subsidiaries: Hellenic Electricity Transmission System and Hellenic Electricity Distribution Network. Athens Water and Sewer ( OTCPK:AHWSF ) is exactly as its name suggests. The interesting holding is Terna Energy ( OTCPK:TREAF ) specializing in renewables, generating power from biomass, wind farms and also provides energy management services. Utility Holdings Symbol Dividend Payout Ratio EPS 5 Year Growth Price/Sales Price/Book Market Cap (Billions USD) ROI/ROE Service Public Power PUPOF 0.00% 0.00% -0.56 0.20 0.20 $1.115 0.71/1.72 Electric Athens Water & Sewer Athens: EYDR 3.47% 0.2% -3.31 1.88 0.67 $0.562 2.99/4.71 Water & Sewage Terna Energy TREAF 0.00% 0.00% -17.46 1.81 0.91 $0.289 1.52/4.26 Renewable Energy Data from Reuters The major Energy holding is Motor Oil Hellas ( OTCPK:MOHCY ) . The company refines oil to lubricants, aviation fuel, gasoline heating oil, LPG and asphalt. Its market cap $1.137 billion USD and does not pay a dividend. Its EPS is about $0.64 resulting in a P/E of 16.50. Its price to sale multiple is 0.15, price to book 2.24 and to cash flow, 7.06. Hellenic Petroleum is essential a petroleum and petrochemical refiner and producer. The company also pursues oil and gas exploration, power generation and energy trading. Ellaktor ( OTCPK:ELLKY ) is a construction company providing buildings, infrastructure, waste treatment, industrial and quarry mining. Metka ( OTCPK:MTKAY ) is an abbreviation for ‘Metal Construction in Greece’ and services the Energy, Infrastructure and Defense industries with metal fabrication products. Industrial Holdings Symbol Dividend Payout Ratio EPS 5 Year Growth EPS Price/Book Market Cap (Billions USD) ROI/ROE Hellenic Petroleum ELPE:GA 4.89% NA NA $ -0.69 0.94 $1.485 -5.84/-11.30 Ellaktor ELLKY 0.00% 0.00% NA $ -0.31 0.36 $0.288 -1.39/-6.06 Metka MTKAY $ 1.15 $0.417 12.06/13.21 Data from Reuters To sum up, the fund has the same structure as any general single country focused fund. The difference being is that the fund covers a small, depressed economy. The metrics in the tables clearly show projected negative growth for most of these companies for the next several years. On the other hand, the nation of Greece is as economically depressed as a nation might possibly become in modern Europe; however, the EU put the brakes on a complete collapse. So the significant difference is that Greece has the support as a member of the much more advance, wealthier, diverse and resource rich EU economy. Further, as noted above, larger more stable European companies are willing to invest capital in Greece. According to Global X, there’s a 0.06% custodial fee and a management fee of 0.55%, hence fees exceed the industry average of 0.44%. The distribution is annual, with a 30 day SEC yield of 1.77%. The return on equity is 2.10%, a P/E of 26.17 and price to book of 0.55. Once again, this is investment will take patience and is best suited for a high risk tolerant portfolios. However, an experienced investor might realize that in the bigger picture, knowing the support Greece receives from its fellow EU members, that there’s little to fear and much to gain.