For investors looking to avoid underperformance, VanEck Vectors Egypt Index ETF (EGPT - Free Report) is probably on radar now. The fund just touched a 52-week low and EGPT is down nearly 37.6% from its 52-week high price of $41.80/share.
But is more pain in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
EGPT in Focus
EGPT is the sole ETF tracking Egypt and holds 26 stocks in its basket. The fund is highly concentrated in the real estate and the financial sector with each accounting for more than one-fourth of the allocation. The fund charges investors 98 basis points a year in fees and its top holdings are Global Telecom Holding, Commercial International Bank and Edita Food Industries (see all Africa-Middle East Equity ETFs here).
Why the Move?
Egypt has been an area to watch lately as its central bank floated its currency for the first time in order to boost investment and ease dollar crunch. While stocks jumped the most in eight years, the local currency nosedived almost 50% against the U.S. dollar. The country is looking to secure a $12 billion bailout loan from the International Monetary Fund (IMF).
More Pain Ahead?
Currently, EGPT has a Zacks ETF Rank of 4 or ‘Sell’ rating with a High risk outlook, suggesting its continued underperformance in the coming months. While the government alongside the central bank has been implementing a series of reforms aimed at reviving the economy, there is still some downside risk signaling caution, and investors should wait until the sector bottoms out before jumping into this ETF.
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