This week has been shockingly flat. The chatter on the tube is that this is the usual August trading and that could be true but I have to wonder if such narrow trade gets resolved with a big move in either direction. We seemed to be very volatile earlier this summer, then very dull so maybe something more exciting is coming up. Adam Warner touched on this yesterday when he noted how cheap options seem to be.
A reader noted that the WisdomTree Pacific Ex-Japan High Yielding Equity Fund (DNH) is 87% invested in Australia as a follow up to my post yesterday. There is also 6% in New Zealand. This is similar to an iShares Fund with a similar name that trades under ticker EPP but EPP is only 66% Australia.
DNH may not be so hot as a truly regional fund but it looks like it fits the bill as a proxy for Australia. Also DNH is expected to yield 6.79% compared to a roughly 3.3% yield for EPP and 3.1% for EWA.
I have disclosed owning EWA personally and for a few clients. The big difference in DNH's composition is that BHP has no weight in the fund (at least I did not find it) but even if I missed it the basic materials sector only has a 3.95% weight in the fund. BHP weighs in at 8.2% of EPP and 12.3% of EWA.
BHP has been a fine stock through this commodity cycle. If that continues, DNH may get left behind. One idea I will study is 75% of Australian exposure in DNH and 25% in BHP, or maybe Rio Tinto. As an example; if 4% of an entire portfolio in Australia makes sense then 3% would be DNH and 1% in a mining stock.
Obviously this does not fly in certain portfolios and it is just an early morning thought but even if the tactic dies not fit, the idea of blending products does make a lot of sense to me.
Wikinvest Wire
6 comments:
Roger,
What's your opinion about EWO. It performed better than EWA historically, although it is focused on financial sector (arguably with indirect link to commodity etc).
I used to own it across the board but sold it poorly.
I don't view as having anything to do with Austriala, in either an obvious way or in a secondary way.
Depending, the oil company is either the largest or second largest holding and then the fund is very heavy in financials as you say.
The pros are public pension money constantly going into the market and Austria is the financial gateway to central and eastern Europe. The negative is that it may not insultate from a big downturn in emerging markets.
What is you opinion of MIC and it's CEFs: MGU & MGD
MIC has made a nice recent move.
Would any of these sufficiently capture OZ?
Thanks,
The North End of Walker
What is you opinion of MIC and it's CEFs: MGU & MGD
MIC has made a nice recent move.
Would any of these sufficiently capture OZ?
Thanks,
The North End of Walker
Hey neighbor,
The products in question are managed by Macquarie Bank. MIC is a client and personal holding and has been for while.
MGU is weighted 16% in Austalia as is MFD, not MGD but MFD. I own MIC because the concept, for all three, is interesting, and I believe less exposed to the economic cycle but I don't think of any of them as being proxies for Australia.
Hi again Roger, just saw now the later post.
Thanks for the input - this is exactly what I was looking for - to see what "gets given" in order to provide the monstrous yield. As you guessed correctly, I am one of those yield-oriented investors.
I'll take the idea of DNH+BHP into consideration. It looks good.
thanks again and keep up the good work
Tzvika
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