NEW YORK (TheStreet) --Investing in Italy and the iShares MSCI Capped Italy ETF (EWI)has been a money loser for many years. According to Yahoo Finance EWI is down 26% on a price basis from 10 years ago and it is still down 57% from its pre-financial crisis high although it is up 11% in 2013.
Italy has been a basket case of corrupt and peculiar politics, bailouts and poor economic data like a 12.5% unemployment rate. While the country is a long way from being fundamentally sound there are signs that things may no longer be getting worse and at some point Italian equities will recover.
The variable to a recovery of course is time but when it occurs EWI will obviously be an easy way to capture the effect. Reasons to be encouraged that a recovery could be close at hand is news this week reported by MarketWatch that the Italian economy appears to have emerged from its latest two-year recession as the second- and third quarter GDP reports were both revised to unchanged from previously negative reports.
While it is still too early to declare a fundamental victory it may be true, as mentioned above, that things are not getting worse and based on the history of normal market function where equity markets are typically a leading indicator now could be the time for Italy and EWI.
Like many smaller markets, the financial sector is the largest at 30% of the fund. Energy is second at 23%, followed by utilities and industrials which each have 15% and consumer discretionary at 10%. The fund has no exposure to tech, health care, consumer staples or materials.