When selecting ETFs for Chartwell ETF Advisor’s portfolios, Carl Delfeld look at several factors such as fundamentals of companies in the ETF basket, capital flows, technical factors, macro indicators, currencies and so on. But the direction of market reforms, which is what politics is all about, sometimes rises to the top when picking country ETFs. Think of the Reagan led Republican sweep in 1980 and the significant tax cuts and market reforms in Ireland and Australia which preceded their strong economic growth and sustained bull markets.
Sweden is just such a case. For 65 of the last 74 years and the last 12 years, the center -left Social Democrats have been in control but the center-right opposition led by Mr. Fredrik Reinfeldt rolled on to victory on September 17th.
The Kingdom of Sweden, with a population of 9 million and area exceeding that of California, has many attributes which investors should appreciate. King Carl Gustav has reigned since 1973 over a well educated citizenry. It is blessed with ample natural resources like iron ore, copper, gold, timber, lead, zinc and hydro power but 70% of its economy is driven by services.
Sweden’s per capita GDP is $30,000 and it has a balanced budget surplus, current account surplus, opted out of Euro in 2003 and a vigilant central bank (Riksbank) which is targeting an inflation rate of 2%. Sweden’s stockmarket is also reasonably priced at 13 times earnings.