ETF Talk: ‘Tell Me, O Muse…’

“But I dwell in clear-seen Ithaca… a rugged isle, but a good nurse of young men; and for myself no other thing can I see sweeter than one’s own land.”

— Odysseus, “The Odyssey”

All men can appreciate the warmth and familiarity of home after a long, arduous journey. But to yearn for that comfort, one must first journey forth. This is as true for the Greeks sailing off to war (though Odysseus’ 20-year foray abroad is a bit longer than we’re likely to experience) as for sailing your portfolio to foreign market waters.

As the U.S. market recovers from the last bout of tariff whiplash, the Moody’s downgrade of the nation’s credit rating and a rough geopolitical terrain, looking to foreign markets can be a palliative move for your portfolio, getting exposure to different economic cycles, drivers and sector mixes via international markets.

So, with that in mind, grab your ὅπλον and δόρυ (that’s your shield and spear) as we travel to Greece to find this week’s exchange-traded fund under consideration, Global X MSCI Greece ETF (GREK).

This fund, founded in 2011 and managed by Global X Management Company, is the first and only U.S.-listed ETF to directly target Greek stocks. It invests in the largest and most liquid companies in Greece. At least 80% of its total assets are invested in the securities of the underlying index, the MSCI All Greece Select 25/50 Index, and in American Depositary Receipts and Global Depositary Receipts.

You may be wondering why invest in Greece, given its protracted and severe financial crisis that began in 2008. Well, in the years since, the country has been recovering steadily with the help of economic reforms, an improved credit rating and fiscal discipline (not to mention a rebound in tourism). With Greece expected to continue its robust economic recovery and grow ahead of Western European peers, the financial crisis is starting to become a distant memory.

To put some numbers behind all this, the Greek economy grew by 2.3% in 2024, with a 2.6% year-over-year growth rate in the fourth quarter of 2024, significantly outpacing the Eurozone. In addition, the banking sector has stabilized and is now profitable. This is important, given that a little more than half of the GREK portfolio is dedicated to banks and related stocks. But with impressive returns of nearly 40% this year, it’s hard to find fault with that allocation.

Such a shallow market does present risk, however. With limited diversity, the fund will be vulnerable to any sector-related downturns. Another thing to consider is that the fund is priced in U.S. dollars, while the stocks are priced in euros, meaning currency fluctuations could introduce volatility.

The fund has net assets of $237.95 million and a big, but purportedly sustainable, yield of 3.67%. It has a moderate expense ratio of 0.57%. GREK rose 5.22% during the last month, 17.61% in the last three months but fell 25.47% for the year to date.

The fund is small at just 31 holdings, but these include the largest stocks in the Greek market. The top 10 holdings account for a whopping 75% of the portfolio and include National Bank of Greece (ETE GA), 15.96%, Eurobank Ergasia (EUROB GA), 12.06%, Alpha Services A (ALPHA GA), 10.66%, Piraeus Financial (TPEIR GA), 10.65%, Melten Energy & Metals SA (MYTIL GA), 5.03%, OPAP SA (OPAP GA), 4.75%, Hellenic Telecom (HTO GA), %, Jumbo SA (BELA GA), 4.22%, Public Power Corp (PPC GA), 3.88% and Titan SA (TITC GA), 3.33%.

Chart courtesy of Stockcharts.com.

Though a small market, Greece’s economic growth, reduced public debt, political stability and improved banking sector make GREK an increasingly attractive investment opportunity. And with the FTSE Russell recently moving Greece to the “Advanced Emerging” category and its consideration of a possible reclassification of Greece as a developed market, this fund is looking like an attractive island to journey to if you are considering investing outside of the United States.

Beware, however, that you may encounter your own mythical obstacles if you travel the markets like the much-wandering Odysseus. Investors should always do their due diligence before adding any stock, fund or ETF to their portfolio.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.