I am retired and take educated guesses on all things financial.

January 10, 2007

January 11, 2007: Tranquility in ETF land

Those of us sporting gray hair, or no hair, remember the days of the 1960s "go-go" stock era and the "nifty fifty stocks" (buy, hold and forget'em until retirement), the mid 70s gold bugs leading to the survivalists (dried beans and powdered milk in a cave as a lifestyle choice), etc. Every few years we have a can't-be-wrong investment strategy that gets press. With the plethora of media and investment alternatives, this type of investment mania has been tempered. Still, how many of us have funds invested in some Chinese sweatshop, Viet Nam rice paddy-come-free-trade zone, or in the latest tech hottie? Perhaps in all three, which is called diversification by some.

It may pay to park some funds in two ETFs that take great pride being safe havens for investors of all shapes, sizes and political persuasions, Switzerland and Singapore. The two ETFs I prefer are iShares MSCI Switzerland Index Fund (EWL) and iShares MSCI Singapore Index Fund (EWS). I like (and own) them not only because of their deserved reputation as wonderful islands of financial freedom and safety, but also because of each ETF's portfolio with weightings that are conservative with steady growth evident.

Briefly, EWL has assets over $239m and a low expense ratio of .59%. It trades at around $24.50/share. Top holdings include Nestle (12.53%), Roche Holdings (12.14%),
Novartis (11.48%), UBS (10.54%), Credit Suisse (5.05%), Zurich Financial (4.93%),Swiss Reinsurance (4.39%), ABB (3.99), Compagnie Financiere Richemont (3.96%) and Syngenta (3.16%) some other holdings (which only total 39 companies, light for a national index) include Swatch Group, PSP Swiss Property, Logitech, Pieter Holding and Phonak Holding.

Breaking down portfolio categories I see Pharma (23.61%), Capital Markets (15.59%), Food Products (12.53%), Insurance (9.32%), Chemicals (6.52%), Textiles Apparel and Luxury Goods (6.29%), Health Care Equipment and Supplies (5.31%), Electrical Equipment (3.99%), Construction Materials (2.96%) and Diversified Telecommunication (2.74%).

Not an aggressive growth mix, for sure, but an elegant portfolio.In my opinion, worthy of inclusion in a "permanent" diversified portfolio.

The Gnomes of Switzerland must gave sent an elf friend of theirs to Singapore, which has become "Switzerland Asia" and more with no end in sight to enhanced status as a haven for safety and investment expertise. The hard working, clean city state of Singapore sits on the world's busiest shipping lane and is the world's largest transit port. One may contest the harsh laws and level of punishment for what we in the West see as merely social transgressions. However, this country runs like a finely tuned Swiss watch with a superbly educated and internationally acclaimed workforce in both white and blue collar areas of employment.

EWS has $1.105b in assets and trades at $11.00/share.The expense ration is .59%.
The top percentage portfolio stocks are DBS Group Holdings (13.23%), Singapore Telecommunications (12.58%), United Overseas Bank (12.40%), Singapore Airlines (5.08%), Keppel Corp. (4.64%), Capitaland (3.97%), Singapore Press Holdings (3.48%) and the Singapore Exchange (2.36%).

Top sectors of this ETF are Commercial Banks (35.54%), Diversified Telecommunications (12.58%), Real Estate (11.95%), Industrial Conglomerates (8.70%), Airlines (5.08%), REITs (2.84%), Diversified Financial Services (2.36%) Aerospace and Defense (2.15%) and Machinery (1.94%).

Singapore is another of those very few places I would bet on for the long haul, and may be an Asian investment with the most stable environment and future both politically and economically. Steady as she goes..... will tell you all you need to know about these funds.

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