There has been ample talk in recent weeks that Cyprus is on the brink of departure from the eurozone, but there is no Cyprus-specific ETF for eager short-sellers to pummel.
However, most of the 17 members of the common currency program are tracked by a U.S.-listed ETF. Yes, there is even a Finland ETF, the iShares MSCI Finland Capped Investable Market Index Fund (BATS: EFNL).
One nation represented by two country-specific ETFs wants in on the euro despite currency's obvious woes. That country is Poland. On Wednesday, Polish prime minister, Donald Tusk said he is open to a referendum that would allow for a change to the country's Constitution, which could pave the way to joining the common currency regime.
Under the current construction of Poland's Constitution, only the zloty can serve as the country's currency, according to the New York Times.
While Poland's membership as a euro country is still at least several years away, the impact such a move could have on the iShares MSCI Poland Capped Investable Market Index Fund (EPOL) and the Market Vectors Poland ETF (PLND) is worth lamenting. Combined, the two ETFs have about $180 million in assets under management, a number that has previously been higher.
Both ETFs have struggled this year on fears economic growth is slowing in Poland. Poland, which has been an economic juggernaut in Eastern and Central Europe, is expected to have GDP growth of just 1.2 percent this year, according to the European Commission's latest estimate. That estimate is down from the previous call of 1.8 percent growth and would represent Poland's most slack pace of growth in 12 years.
Remember, Poland is classified as an emerging market. Many investors are not going to scurry to 1.2 percent growth rates with the subsequent emerging markets volatility when comparable if not better growth can be had in less volatile developed markets such as the U.S.
Not surprisingly, EPOL is down 14.1 percent year-to-date. PLND has not been a peach either with a loss of more than 12 percent. Call that an average loss of 13 percent for the Polish ETF pair, but it is still better than what investors would have gotten with the ETFs tracking several current Eurozone members.
For example, the Global X FTSE Greece 20 ETF (GREK) is offer more than 20 percent year-to-date. The iShares MSCI Italy Index Fun (EWI) is down 14.2 percent. The iShares MSCI Spain Index Fund (EWP) looks good by comparison, but over the past two years, EWP has plunged nearly 34 percent. EPOL and PLND have not been great over that time, but they have been better than EWP.
It is not just the slack GDP forecast that has plagued Poland ETFs this year. The country's unemployment rate hit 13.4 percent in December. However, not to be trite, that would imply Poland would fit in quite well in the eurozone as unemployment in Greece and Spain is noticeably higher than 13.4 percent.
Actually, the European Union should be courting Poland, not the other way around. Growth of 1.2 percent this year is still growth, something that is going to be hard to come by in eurozone's peripheral nations. The eurozone is already home to one emerging market in the form of Greece. To clarify, one index provider stripped Greece of its developed market status earlier this year.
Poland's economy, while dealing with obvious near-term issues, has proven somewhat resilient to eurozone shocks. A growing middle class has fostered strong domestic demand, meaning EPOL and PLND are not ETFs that are deeply tied to a fragile export story.
Another way of looking at the situation is if European leaders saw fit to let Cyprus and Greece into the eurozone, why not let in Poland in? Last year, only five countries that use the euro had larger economies than Poland Germany, France, Italy, Spain and the Netherlands.
Again, it will be a few years, if ever, that Poland adopts the euro. That might be good thing for EPOL and PLND because a case can be made that Poland brings more to the table than the euro offers in return.
For more on Poland, click here.
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