iShares MSCI United Kingdom Index (ETF) (EWU)

Touted as on one of the quintet of trillion dollar economies of western Europe, U.K is a leading trading and financial center in the world Enjoying one of the uninterrupted economic growths from 1992, the country has advanced in many fronts and averaged a annual GDP growth of 2.5% during the same period.


The country is home to a large number of multinationals, in sectors diverse as petroleum, telecom, consumer durables, banking etc. With such a robust economic growth, almost all the sectors were performing well. Thus it was no wonder that iShares MSCI United Kingdom Index (EWU) fund with its 161 stocks spread across almost all leading sectors delivered a yearly return of 30% for the year 2006. The presence of multinationals like British Petroleum, HSBC bank, Vodafone and Unilever boosted the performance of the fund.


The economy is expected to go on an overdrive in 2007 with a 3% increase; up from 2.7% in 2006.This increase is backed by broad-based performance and not by any single sector. Most of the multinationals included in the fund has their fortunes tied to the emerging Asian markets, which on an average is expected to grow by 8% in 2007. This prospect makes the fund promising. The housing market in the U.K. has been doing well for quite some time with growth rate hovering around 5% range, fueling the private consumption. This is expected to continue for the year 2007 with almost similar growth rate. Expected private consumption growth by this factor alone is 3.4% in 2007, a good economic growth and low level of unemployment will only fuel this rate further. With banks cornering a major share of this housing market, any growth sounds good for the whole banking sector. Thus the fund looks to stick to its spectacular return for the second year in a row.