One way to invest in foreign financial companies is via their American Depository Receipts if they are listed on the US markets.Recently I came the KBW Global Financials (ex-u.s.) Index created by investment bank Keefe, Bruyette & Woods. The components of the index include some of the major global financials that US investors can access easily thru ADRs.
Definition of the KBW Global Financials (ex-u.s.) Index:
The Index is currently comprised primarily of American depository receipts. The Index is a modified market capitalization weighted index that seeks to reflect the performance of approximately 60 non-U.S. financial companies that are principally engaged in the business of providing financial services and products, including banking, insurance and diversified financial services.
The components of this index at the end of February are listed below with their current dividend yields:
| S.No. | Index Component | Ticker | Dividend yield as of Mar 1, 2013 |
|---|---|---|---|
| 1 | ACE Limited | ACE | 2.29% |
| 2 | Aegon | AEG | 4.62% |
| 3 | Aspen Insurance Holdings Limited | AHL | 1.89% |
| 4 | Alterra Capital Holdings Limited | ALTE | 2.08% |
| 5 | Aviva PLC | AV | 7.65% |
| 6 | Allianz SE | AZSEY | 4.35% |
| 7 | Brookfield Asset Management Inc | BAM | 1.56% |
| 8 | Banco Bradesco | BBD | 2.91% |
| 9 | Banco Bilbao Vizcaya Argentari | BBVA | 5.64% |
| 10 | Corpbanca | BCA | 6.90% |
| 11 | Banco de Chile | BCH | 3.62% |
| 12 | Barclays Capital, Inc | BCS | 2.24% |
| 13 | BBVA Banco Frances SA | BFR | 0.00% |
| 14 | Banco Macro SA | BMA | 0.00% |
| 15 | Bank of Montreal Group of Cos. | BMO | 4.62% |
| 16 | Bank of Nova Scotia | BNS | 3.84% |
| 17 | Banco Santander-Chile | BSAC | 3.92% |
| 18 | Banco Santander Brasil SA | BSBR | 4.75% |
| 19 | BanColombia SA | CIB | 2.49% |
| 20 | Canadian Imperial Bank | CM | 4.53% |
| 21 | Credit Suisse Group | CS | 2.99% |
| 22 | Deutsche Bank Securities | DB | 2.13% |
| 23 | Gafisa ADS | GFA | 0.00% |
| 24 | Grupo Financiero Galicia SA | GGAL | 0.00% |
| 25 | HSBC Holdings PLC | HBC | 3.28% |
| 26 | HDFC Bank Ltd. ADS | HDB | 0.61% |
| 27 | Desarrolladora Homex | HXM | 0.00% |
| 28 | Icici Bank | IBN | 1.37% |
| 29 | ING Groep NV | ING | 0.00% |
| 30 | Bank of Ireland | IRE | 0.00% |
| 31 | Inversiones y Representaciones S.A. (IRSA) | IRS | 10.35% |
| 32 | US Itau Unibanco Holding SA | ITUB | 3.23% |
| 33 | Orix USA Corp | IX | 1.00% |
| 34 | Kookmin Bank | KB | 1.78% |
| 35 | China Life Insurance | LFC | 1.22% |
| 36 | Lloyds TSB Group | LYG | 0.00% |
| 37 | Manulife Financial | MFC | 3.49% |
| 38 | Mizuho Financial Group | MFG | 3.33% |
| 39 | Montpelier Re Holdings Ltd. | MRH | 1.89% |
| 40 | Mitsubishi UFJ Financial Group | MTU | 2.62% |
| 41 | Nomura Holdings | NMR | 0.82% |
| 42 | PartnerRe Ltd. | PRE | 2.87% |
| 43 | Prudential PLC | PUK | 2.73% |
| 44 | A.F.P. Provida SA | PVD | 8.02% |
| 45 | Royal Bank of Scotland Group | RBS | 0.00% |
| 46 | Royal Bank of Canada | RY | 3.95% |
| 47 | Shinhan Financial | SHG | 1.70% |
| 48 | Sun Life Financial Services | SLF | 5.09% |
| 49 | Sumitomo Mitsui Financial Group | SMFG | 3.03% |
| 50 | Banco Santander | SAN | 11.58% |
| 51 | Toronto-Dominion Bank | TD | 3.81% |
| 52 | UBS AG | UBS | 0.70% |
| 53 | Westpac Banking Corp | WBK | 4.38% |
| 54 | Woori Finance Holdings Co., Ltd. | WF | 1.81% |
| 55 | XL Group plc | XL | 1.94% |
Source: KBW
One cannot invest directly in the index. However the PowerShares KBW International Financial Portfolio ETF (KBWX) is based on the KBW Global Financials (ex-u.s.) Index. This ETF has a small asset base of just over $2.4 million and the 12-month yield is 5.15%. The fund was launched in late 2010 and in one year the fund is up by about 27% which is close to the return of the KBW benchmark index.
Note: Dividend yields noted are as of Mar 1, 2013
Disclosure: Long many companies noted in the table above.
