Exchange traded fund (ETF) investors looking to add an element of diversification with emerging markets (EM) may want to give Greece a closer look. Its economy expanded by 2.3% during the first quarter, marking a rebound from the effects of the pandemic in the last two years.
Still, headwinds of global inflation could affect Greece moving forward, potentially giving pause to investors who want to re-add EM assets to their portfolios. While Q1 grew at a faster pace, the economy did notch a yearly decline.
“Greece’s economy expanded in January-to-March at a faster pace compared to last year’s fourth quarter but its growth rate decelerated on an annual basis, the country’s statistics service (ELSTAT) said on Tuesday,” a Reuters report noted.
Additionally, like most EM countries, geopolitical forces will weigh in on Greece’s economy. Most notably, the ongoing Russia-Ukraine conflict.
“Greece is primarily exposed to the war in Ukraine through its energy imports from Russia, equivalent to 30% of its total energy consumption. Higher international prices are being passed into domestic energy prices, such as the 79% increase in retail electricity prices in the year to April 2022," said the Organisation for Economic Cooperation and Development (OECD), which expects Greece’s GDP to grow by 2.8% this year.
“Russia and Ukraine are otherwise minor trade partners. Russian tourists generated 1.1% of Greece’s tourism receipts in 2021,” the OECD added. “The maritime services sector, which made up 20% of total exports in 2019, is benefiting from high global shipping demand and prices. Greece is also providing dedicated support for approximately 20,000 Ukrainians, adding to the 32,000 refugees from before the war started.”
Exposure to Greece in One ETF
Investors who are wary of the risk can opt for the Global X MSCI Greece ETF (GREK ), which seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Greece Select 25/50 Index. The underlying index is designed to represent the performance of the broad Greece equity universe.
At a 0.57% expense ratio, GREK gives investors:
- Efficient Access: Efficient access to a broad basket of Greek securities
- Targeted Exposure: Targeted single-country exposure
- A Unique Offering: The first and only ETF to directly target Greece
For more news, information, and strategy, visit the Thematic Investing Channel.