Top picks 2013: Europe Financials Index
The big financial story this year could be a rebound in the troubled eurozone.
Making bets for a calendar year is a tough business, because a lot can happen in a year. So it's a good idea to look for the biggest story available -- one with the potential to make a lasting impact on an investment.
I think the story of the year is likely to be the recovery of Europe and the eurozone countries as the Greek fiscal crisis is resolved.
A healthier Europe will have lots of pent-up demand for financial services, and the iShares MSCI Europe Financial Sector Index Fund (EUFN) is a way to get broad exposure to that demand.
The fund's portfolio includes chunks of HSBC Holdings, Banco Santander, Allianz, UBS, Standard Chartered, BNP Paribas and others.
A little over half of the fund's holdings are in banks, with insurance accounting for a little over a quarter and the rest spread out over diversified financials and real estate.
This is a turnaround situation, and that can be risky, especially if other European countries start to bleed out. But I think it offers attractive risk/reward prospects right now, and it's my pick for best stock of the year.
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