For investors looking to avoid underperformance, iShares MSCI Turkey ETF (TUR - Free Report) is probably on radar now. The fund just touched a 52-week low and TUR is down nearly 30.3% from its 52-week high price of $46.42/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:
TUR in Focus
TUR is the sole ETF tracking Turkey and holds 70 stocks in its basket. The fund is highly concentrated in the financial sector accounting for 44.3% of the allocation, while industrials and consumer staples round off the top three. The fund charges investors 62 basis points a year in fees and its top holdings are Turkiye Garanti Bankasi A, Akbank A and Bim Birlesik Magazalar A (see all European Equity ETFs here).
Why the Move?
Turkey has been an area to watch lately as the European Parliament voted by 471 to 37 to temporarily halt talks on Turkey’s bid to join the EU. The overwhelming votes to freeze talks were largely due to the Turkish government's stand on democratic rights and freedom, especially the failed coup in July to oust Turkish President Recep Tayyip Erdogan.
More Pain Ahead?
Currently, TUR has a Zacks ETF Rank of 5 or ‘Strong Sell’ rating with a High risk outlook, suggesting its continued underperformance in the coming months. While the country’s central bank has implemented a rate hike to curb the fall of local currency lira, there is still some downside risk. Investors should therefore exercise caution and wait until the sector bottoms out before jumping into this ETF.
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