Europe may be lagging, but the fund issuers do not appear bored with the continent. The European Central Bank (ECB) President Mario Draghi’s ultra-easy monetary policy and companies’ ability to navigate through rough waters seem to be the real reasons for issuers’ enthusiasm.
No doubt the continent is presently in a rough spot. Still, investors should not forget that the continent emerged out of a prolonged recession just a year back. A 5-year low inflation level in September triggered speculation about further easing from the ECB. This was over and above the bank’s recent launch of a program to buy back asset-backed securities and covered bonds.
Clearly, investors are pinning hopes on the European recovery story. Sensing this mood, fund issuer ALPS has launched ALPS STOXX Europe 600 ETF (STXX) on October 31. A few days back, another issuer First Trust has also rolled out a Euro Zone ETF, suggesting the space is pretty hot from an issuer perspective.
STXX in Focus
The passively managed fund looks to follow the STOXX Europe 600 Index to provide exposure to 600 largest European companies. The fund is market-cap weighted. STXX is a highly diversified fund with no stock accounting for more than 2.71% of the portfolio. Among individual holdings, Novartis takes the top spot with 2.71% weight, followed Nestle and Roche with, respectively, 2.68% and 2.35% exposure.
Sector wise, Financials gets the highest exposure with 23.39% of the portfolio. Health Care, Consumer Staples, Industrials and Consumer Discretionary also get double-digit investments, while Information Technology gets the least exposure with only 3.55% of the basket.
As far as country exposure is concerned, United Kingdom (29.95%) gets the top priority while France (14.87%), Switzerland (14.87%) and Germany (12.69%) take up the next three positions. The fund charges 25 bps in fees.