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

February 10, 2008

February 12, 2008: IShares Switzerland: Ready to (finally) reward investors?

I consider Switzerland, Dubai and Singapore to be major centers of commerce, finance of all sorts, trade and intrigue in the 21st century. These safe havens draw assets in the mega billions of dollars from ethical and rogue nations and characters alike.

Stable, micro-managed Singapore as an investment destination has done reasonably well in an unpredictable third world region. Dubai is a work in progress. Switzerland has underperformed. Switzerland, especially IShares Switzerland (EWL), may be getting based to outperform as markets elsewhere gyrate, shaking many investor's tolerance for risk.

Looking at the portfolio of EWL, the top ten holdings of the approximately forty securities held comprise almost 70% of the assets. These top ten securities include Nestle, Roche Holdings, Novartis, UBS, ABB Ltd., Credit Suisse Group, Zurich Financial Services, CIE Financial Services, Syngenta AG and Swiss Reinsurance. Portfolio turnover is a paltry 5%.Most of the portfolio is in financials and health care which are not where most financial pros are telling investors to sink their investment dollars.

I submit that the world-class companies listed in this ETF are going to rebound, and rebound strongly. Being located in Switzerland, the most politically nuetral of nations, the companies within EWL will have no trouble doing business with any country on the world. That cannot be said about companies headquartered elsewhere. The entire Swiss ETF reads like a gold-plated roster of quality regarding future business prospects.

Trading at $23.66 per share with an average volume of 543,000 shares over the past ten days, EWL has declined almost 10% in value during the past month. EWL has set off mildly bearish signals all over the place, is not loved by Morningstar and has underperormed most broad-based Europe indexes for quite some time. EWL is based on the MSCI Switzerland Index. The fund has a 52 week trading range of $27.76-$22.95 and an expense ratio of .51% with a 1.05% dividend. To most, boring and unloved. To me, a low risk opportunity to enter a stable and internationally respected roster of quality companies on the cheap.

As we continue to reach out for investment profits in what has been an unforgiving market practically worldwide, EWL may (finally) be a good choice to include in your portfolio. This ETF is not volatile, not risky, and won't make you rich. It does present the opportunity to reap modest rewards and, importantly, avoid insomnia.