Australia ETF

Ever consider investing down-under with an Australia ETF?

iShares MSCI Australia Index Fund
(NYSEArca: EWA) makes it possible. The long-established $1.4 billion fund tracks an index that seeks to correspond to the price and yield of publicly traded securities in Australia.

The market-cap weighting has resulted in 15% of the holdings invested in a single company – BHP Billiton (NYSE: BHP). In total, over 28% of the fund is held in materials companies as of 02.28.08.

The fund is also heavily concentrated in financials with almost 40% held in banks such as Commonwealth Bank of Australia (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac Banking Corp (NYSE: WBK). The upside is that EWA currently throws off a healthy ttm yield of 4.68% (source: Yahoo Finance).

The one-year performance of EWA relative to the market clearly reflects the concentration in commodities (the run up) and financials (the run down).

However, for those investors with a longer time horizon, the 5 year picture shows a steady outperformance and the value of global diversification.

See the iShares website for more information.

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