ETF Coverage

In the last few weeks Investors Business Daily has started to devote more attention to ETFs. I'm not just mentioning this because, ahem, I have been quoted several times.

The most recent article is out today is about iShares UK (EWU). In addition to a couple of thoughts from some joker in Arizona is some analysis from Matt Pickering, co-manager of the ICAP International Fund. Pickering said "The U.K., similar to Australia, is more of a mature economy..."

When I read that I thought there might be some discussion comparing the two but space did not permit. It is worth thinking about.

There are some similarities with the two ETFs, EWU and IShares Australia (EWA). Both have a lower beta than the S&P 500 and a higher yield. Both have a lot of resource heavy companies. EWU more so energy and EWA more of every other resource. Both are heavy in financials but EWA has 47% in financials while EWU is closer to 25% in the sector.

There are also a couple of stocks that show up in both funds due to dual listings, BHP Billition and Rio Tinto.

There are some big differences between the two countries. Australia has not had an economic recession since 1991. GDP growth is healthier down under as well. Despite the heavy weight to resources, the UK is not where the resources are. Over the last year, both EWU and EWA have traded similarly but over the last four years EWA is way out in front of EWU because, IMO, EWA captures the commodity effect.