New ETFs On The Block: ALPS STOXX Europe 600 ETF (STXX)

Ulli Europe Contact

104700912Despite several European economies struggling with deflation and de-growth, many marquee European companies that have with sizeable international exposure managed to beat earnings estimate in 2014.

The cold-response by the region’s lenders to European Central Bank President Mario Draghi’s recent launching of the Targeted Long-Term Refinancing Operation left the door wide-open for further policy easing by the central bank.

Adequate liquidity in the common-currency area coupled with falling crude prices are likely to boost demand in the 28-nation economic-union going into 2015.  That probably explains why fund issuers are still upbeat about the continent’s recovery despite annual inflation-rate plunging to record low levels in recent months.

Sensing investor optimism about Europe, ALPS recently introduced the ALPS STOXX Europe 600 ETF (STXX). The new fund tracks the STOXX Europe 600 index, one of the most widely used indexes in the continent that accounts for nearly 90 percent of the market capitalization for developed Europe.

A recent Reuters survey found more than 60 percent of stocks that have announced earnings for the third-quarter have either met or exceeded forecasts while revenues for nearly 60 percent companies were either in-line or higher than analysts’ expectations.

The benchmark-index rose more than three percent in November alone and consists of stocks from countries including Germany, France, the UK, Spain, Italy, Sweden, Switzerland, Czech Republic, Austria, Netherlands, Finland, Norway, Portugal, Denmark and Luxembourg. The index includes members of the STOXX Europe Mid– and STOXX Europe 200 Small indexes since their components have historically outperformed the STOXX Europe 200 Large index.

STXX is a passively-managed and market-cap weighted fund that represents the performance of the 600 largest European companies. The underlying index includes stocks that have a three-month average trading volume of at least one million Euros. Drug-manufacturer Novartis is the top holding with 2.79 percent weight, followed by Nestle (2.72 percent), Roche (2.41 percent), HSBC (2.11 percent) and Royal Dutch Shell (1.45 percent).

Among different sectors, Financial Services get the biggest exposure, followed by Health Care, Consumer Staples, Industrials and Consumer Discretionary.

STXX has an annual expense ratio of 0.25 percent.

Disclosure: No holdings

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