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The Office for National Statistics on Aug 11 reported that the U.K. economy in a surprise turn, beat expectations with 0.2% growth in the second quarter. The growth was led by household consumption and manufacturing output, as per CNBC.
For those seeking to capitalize on the nation's surprising growth, consider exploring pure-play UK ETFs, namely – iShares MSCI United Kingdom ETF (EWU - Free Report) , Franklin FTSE United Kingdom ETF (FLGB - Free Report) , iShares MSCI United Kingdom Small-Cap ETF (EWUS - Free Report) and First Trust United Kingdom AlphaDEX Fund (FKU - Free Report) .
Inside Q2 Data
Against expectations, a Reuters poll of economists as quoted on the CNBC article, anticipated the U.K. GDP to stall in Q2, following an unexpected 0.1% expansion in Q1. The Bank of England's monetary tightening and ongoing inflation were seen curbing demand.
June saw the economy surpass expectations, with a robust 0.5% expansion, outshining the predicted 0.2% growth. This rebound followed a slight contraction of 0.1% in May and a 0.2% upturn in April.
Production significantly increased in the second quarter, driven by a significant 1.6% increase in manufacturing and a strong 0.7% increase in production. Services saw 0.1% growth at the same time. Despite experiencing pricing pressure over that period, the Office for National Statistics highlighted significant gains in household and government consumption.
Economy to Escape Recession?
The Bank of England (BOE) had revised its projections in May and lowered its predictions for a likely recession. As per the CNBC article, according to its latest monetary policy report, the BOE foresees the upcoming quarters to maintain a GDP growth rate of approximately 0.2% in the short run.
U.K. Finance Minister Jeremy Hunt, on Aug 11, in a statement as quoted on CNBC, stated that the BOE currently predicts that the country will avoid recession. The IMF stated that over the longer term, the economy will expand faster than Germany, France, and Italy if the government continues with their plan to support job creation and increase business investment.
JP Morgan Lifts Projections
On Aug 11, according to Reuters, following unexpected Q2 growth and increased speculation about further interest rate hikes, J.P. Morgan revised its projection for the UK's yearly economic expansion. The brokerage now anticipates 0.6% growth in 2023, up from its previous estimate of 0.5%.
Further Rate Hikes on the Table?
Per Reuters, Britain's economy grew unexpectedly in Q2, setting the stage for more interest rate hikes by the Bank of England. However, it still hasn't fully recovered to its pre-COVID level like other major economies. The strong growth suggests that the central bank will likely continue raising rates, as it sees the economy as resilient.
iShares MSCI United Kingdom ETF seeks to track the MSCI United Kingdom Index with an asset base of $2.81 billion and 83 securities in its basket. The fund charges an annual fee of 0.50%.
iShares MSCI United Kingdom ETF has major allocation in consumer staples (19.06%), financials (18.93%) and energy sectors (13.83%). Having a Zacks ETF Rank #3 (Hold) and a Medium risk outlook, the fund has generated returns of 8.06% year to date and 2.33% over the past month (as of Aug 11).
Franklin FTSE United Kingdom ETF seeks to track the FTSE UK RIC Capped Index. The fund has gathered an asset base of $565.86 million and has a basket of 111 securities. Financials, consumer staples and industrial sectors take the top spot with a share of 18.15%, 17.73% and 12.55%, respectively. FLGB charges an annual fee of 0.09%.
Franklin FTSE United Kingdom ETF has a Zacks ETF Rank #3 and has earned 9.44% year to date and 2.14% over the past month (as of Aug 11).
iShares MSCI United Kingdom Small-Cap ETF (EWUS - Free Report)
iShares MSCI United Kingdom Small-Cap ETF seeks to track MSCI United Kingdom Small Cap Index with an asset base of $46.87 million and a basket of 250 securities. Industrials, consumer discretionary and financials take the top spots with a share of 23.18%, 17.57% and 16.36%, respectively. The fund charges an annual fee of 0.59%.
iShares MSCI United Kingdom Small-Cap ETF has a Zacks ETF Rank #3 with a Medium risk outlook. The fund has generated 8.52% year to date and 2.99% over the past month (as of Aug 11).
First Trust United Kingdom AlphaDEX Fund (FKU - Free Report)
First Trust United Kingdom AlphaDEX Fund seeks to track the NASDAQ AlphaDEX United Kingdom Index with an asset base of $24.13 million and a basket of 76 securities. The fund charges an annual fee of 0.80%. Consumer discretionary, industrials and materials take the top spot with a share of 20.88%, 18.70% and 14.81%, respectively.
First Trust United Kingdom AlphaDEX Fund has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook. The fund has gained 9.87% year to date and 2.14% over the past month (as of Aug 11).
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UK ETFs Shine Amid Surprise Economic Growth
The Office for National Statistics on Aug 11 reported that the U.K. economy in a surprise turn, beat expectations with 0.2% growth in the second quarter. The growth was led by household consumption and manufacturing output, as per CNBC.
For those seeking to capitalize on the nation's surprising growth, consider exploring pure-play UK ETFs, namely – iShares MSCI United Kingdom ETF (EWU - Free Report) , Franklin FTSE United Kingdom ETF (FLGB - Free Report) , iShares MSCI United Kingdom Small-Cap ETF (EWUS - Free Report) and First Trust United Kingdom AlphaDEX Fund (FKU - Free Report) .
Inside Q2 Data
Against expectations, a Reuters poll of economists as quoted on the CNBC article, anticipated the U.K. GDP to stall in Q2, following an unexpected 0.1% expansion in Q1. The Bank of England's monetary tightening and ongoing inflation were seen curbing demand.
June saw the economy surpass expectations, with a robust 0.5% expansion, outshining the predicted 0.2% growth. This rebound followed a slight contraction of 0.1% in May and a 0.2% upturn in April.
Production significantly increased in the second quarter, driven by a significant 1.6% increase in manufacturing and a strong 0.7% increase in production. Services saw 0.1% growth at the same time. Despite experiencing pricing pressure over that period, the Office for National Statistics highlighted significant gains in household and government consumption.
Economy to Escape Recession?
The Bank of England (BOE) had revised its projections in May and lowered its predictions for a likely recession. As per the CNBC article, according to its latest monetary policy report, the BOE foresees the upcoming quarters to maintain a GDP growth rate of approximately 0.2% in the short run.
U.K. Finance Minister Jeremy Hunt, on Aug 11, in a statement as quoted on CNBC, stated that the BOE currently predicts that the country will avoid recession. The IMF stated that over the longer term, the economy will expand faster than Germany, France, and Italy if the government continues with their plan to support job creation and increase business investment.
JP Morgan Lifts Projections
On Aug 11, according to Reuters, following unexpected Q2 growth and increased speculation about further interest rate hikes, J.P. Morgan revised its projection for the UK's yearly economic expansion. The brokerage now anticipates 0.6% growth in 2023, up from its previous estimate of 0.5%.
Further Rate Hikes on the Table?
Per Reuters, Britain's economy grew unexpectedly in Q2, setting the stage for more interest rate hikes by the Bank of England. However, it still hasn't fully recovered to its pre-COVID level like other major economies. The strong growth suggests that the central bank will likely continue raising rates, as it sees the economy as resilient.
ETFs in Focus
iShares MSCI United Kingdom ETF (EWU - Free Report)
iShares MSCI United Kingdom ETF seeks to track the MSCI United Kingdom Index with an asset base of $2.81 billion and 83 securities in its basket. The fund charges an annual fee of 0.50%.
iShares MSCI United Kingdom ETF has major allocation in consumer staples (19.06%), financials (18.93%) and energy sectors (13.83%). Having a Zacks ETF Rank #3 (Hold) and a Medium risk outlook, the fund has generated returns of 8.06% year to date and 2.33% over the past month (as of Aug 11).
Franklin FTSE United Kingdom ETF (FLGB - Free Report)
Franklin FTSE United Kingdom ETF seeks to track the FTSE UK RIC Capped Index. The fund has gathered an asset base of $565.86 million and has a basket of 111 securities. Financials, consumer staples and industrial sectors take the top spot with a share of 18.15%, 17.73% and 12.55%, respectively. FLGB charges an annual fee of 0.09%.
Franklin FTSE United Kingdom ETF has a Zacks ETF Rank #3 and has earned 9.44% year to date and 2.14% over the past month (as of Aug 11).
iShares MSCI United Kingdom Small-Cap ETF (EWUS - Free Report)
iShares MSCI United Kingdom Small-Cap ETF seeks to track MSCI United Kingdom Small Cap Index with an asset base of $46.87 million and a basket of 250 securities. Industrials, consumer discretionary and financials take the top spots with a share of 23.18%, 17.57% and 16.36%, respectively. The fund charges an annual fee of 0.59%.
iShares MSCI United Kingdom Small-Cap ETF has a Zacks ETF Rank #3 with a Medium risk outlook. The fund has generated 8.52% year to date and 2.99% over the past month (as of Aug 11).
First Trust United Kingdom AlphaDEX Fund (FKU - Free Report)
First Trust United Kingdom AlphaDEX Fund seeks to track the NASDAQ AlphaDEX United Kingdom Index with an asset base of $24.13 million and a basket of 76 securities. The fund charges an annual fee of 0.80%. Consumer discretionary, industrials and materials take the top spot with a share of 20.88%, 18.70% and 14.81%, respectively.
First Trust United Kingdom AlphaDEX Fund has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook. The fund has gained 9.87% year to date and 2.14% over the past month (as of Aug 11).