The Cheapest ETF In The World

November 08, 2013

Greece ETF GREK has the lowest P/E ratio of any market in the world.

The Greek market is on sale, and I’m not talking about buying islands.

For the past three years, all of the news coming out of Greece has been negative. First, there were rumors of insolvency, then we had austerity and eventually intervention. Somewhere in between those stories we had riots, protests and political infighting. Things got so bad that the country’s largest corporation—a local bottling arm of Coca-Cola, Coca-Cola HBC AG—announced it was leaving the country without looking back.

And yet, despite all of this negativity, and the stubbornly high rate of unemployment still plaguing the country, Greek shares have been slowly recovering. The Global X FTSE Greece 20 (GREK | F-61) is up more than 20 percent YTD, and if you’re a traditional value investor, that could prove to be just the beginning.

Based on our in-house data, the trailing price-earnings ratio on GREK is just 1. In other words, you’re paying just $1 for every single dollar in earnings the 20 companies in GREK brought in over the past 12 months. And that figure is not some quirk of the companies in the fund or the selection process. The MSCI Greece Investable Markets index has a P/E of just 2.5. That’s significantly higher than GREK’s portfolio, but still drastically cheaper than any other single country currently covered by an ETF.

To illustrate just how absurd that figure is, take a look at the 10 cheapest single-country ETFs in our system. Of course, a P/E ratio is only applicable to equity ETFs. Commodities, fixed-income (corporate or otherwise) and currency ETFs don't hold companies, and therefore don't have underlying earnings. The cheapest ETFas measured by P/Emust therefore be an equity ETF.

1_P-E ratios for single country ETFs

Compared with that list, GREK sticks out like a sore thumb. No matter how much trouble Russia seems to be in economically (and politically, for that matter) its market is still priced at 5 times trailing earnings, or 500 percent higher than GREK. Even if you think Greek companies will struggle in the coming months and years, surely there’s a case to be made for buying Greek earnings for 104 cents on the dollar.


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