‘A Cry For Growth’: U.K. ETFs Spike On Cameron Win
Exchange traded funds tracking U.K. equities surged Friday, a day after voters embraced incumbent Prime Minister David Cameron at the polls. The Conservative Party’s surprisingly robust victory was “a cry for policies that are pro-growth,” said Nick Kalivas, senior equity product strategist for ETF provider Invesco PowerShares. Cameron has pledged tax cuts and is expected to institute fiscal consolidation measures.
“That’s why the markets are excited this morning,” Kalivas said.
What’s more, he added, “It could be helpful to Europe in general, it has the potential to spill into policies on the Continent.” Kalivas sees favorable fundamentals for successful investing in the region.
The $ 2.9 billion iShares MSCI United Kingdom (ARCA:EWU) gained 3.5% Friday amid broad gains on the stock market today. Its younger sibling iShares MSCI United Kingdom Small-Cap (), with $ 16.2 million in assets, rose 4.2%.
EWU holds 108 large- and midcap stocks, with 38.3% of assets in the top 10. They include multinationals such as HSBC Holdings (NYSE:HSBC), BP (NYSE:BP), Royal Dutch Shell (NYSE:RDSA)and GlaxoSmithKline (NYSE:GSK).
Financial services are its top sector allocation, with a 21.7% weighting.
It has a 0.48% expense ratio and yields 7.1%.
EWU is up 9% so far in 2015. That compares with 11% for iShares MSCI EAFE (ARCA:EFA), which tracks developed international stock markets, and 3% for SPDR S&P 500 (ARCA:SPY), a proxy for the U.S. stock market.
Stimulus programs in Europe and Japan have polished the allure of international equities among U.S. investors of late.
That was reflected in April ETF performance and asset growth.
“Developed and emerging markets had a very good month, gaining 5% and 8%, respectively, while in the U.S. the S&P 500 and Dow were up less than 1%,” according to Deborah Fuhr, managing partner of research firm ETFGI.
Assets in ETFs/ETPs listed in the U.S. reached a record $ 2.132 trillion at the end of April, according to preliminary ETFGI data.