Two Ways To Invest in Foreign Financials Without Going Abroad

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 ComponentTickerDividend yield as of Mar 1, 2013
1ACE LimitedACE2.29%
3Aspen Insurance Holdings LimitedAHL1.89%
4Alterra Capital Holdings LimitedALTE2.08%
5Aviva PLCAV7.65%
6Allianz SEAZSEY4.35%
7Brookfield Asset Management IncBAM1.56%
8Banco BradescoBBD2.91%
9Banco Bilbao Vizcaya ArgentariBBVA5.64%
11Banco de ChileBCH3.62%
12Barclays Capital, IncBCS2.24%
13BBVA Banco Frances SABFR0.00%
14Banco Macro SABMA0.00%
15Bank of Montreal Group of Cos.BMO4.62%
16Bank of Nova ScotiaBNS3.84%
17Banco Santander-ChileBSAC3.92%
18Banco Santander Brasil SABSBR4.75%
19BanColombia SACIB2.49%
20Canadian Imperial BankCM4.53%
21Credit Suisse GroupCS2.99%
22Deutsche Bank SecuritiesDB2.13%
23Gafisa ADSGFA0.00%
24Grupo Financiero Galicia SAGGAL0.00%
25HSBC Holdings PLCHBC3.28%
26HDFC Bank Ltd. ADSHDB0.61%
27Desarrolladora HomexHXM0.00%
28Icici BankIBN1.37%
29ING Groep NVING0.00%
30Bank of IrelandIRE0.00%
31Inversiones y Representaciones S.A. (IRSA)IRS10.35%
32US Itau Unibanco Holding SAITUB3.23%
33Orix USA CorpIX1.00%
34Kookmin BankKB1.78%
35China Life InsuranceLFC1.22%
36Lloyds TSB GroupLYG0.00%
37Manulife FinancialMFC3.49%
38Mizuho Financial GroupMFG3.33%
39Montpelier Re Holdings Ltd.MRH1.89%
40Mitsubishi UFJ Financial GroupMTU2.62%
41Nomura HoldingsNMR0.82%
42PartnerRe Ltd.PRE2.87%
43Prudential PLCPUK2.73%
44A.F.P. Provida SAPVD8.02%
45Royal Bank of Scotland GroupRBS0.00%
46Royal Bank of CanadaRY3.95%
47Shinhan FinancialSHG1.70%
48Sun Life Financial ServicesSLF5.09%
49Sumitomo Mitsui Financial GroupSMFG3.03%
50Banco SantanderSAN11.58%
51Toronto-Dominion BankTD3.81%
52UBS AGUBS0.70%
53Westpac Banking CorpWBK4.38%
54Woori Finance Holdings Co., Ltd.WF1.81%
55XL Group plcXL1.94%


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.

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