Greece and Safe Haven ETFs

Whichever way you think the eurozone is going to go, there are ETFs for all investors seeking exposure to UK and European government bonds

Jose Garcia Zarate 6 July, 2015 | 3:38PM
Facebook Twitter LinkedIn

Will Greece crash out of the Euro? No one knows for sure. Would it really matter? Yes, though probably not as much as it did two years ago. Financial markets have shown a rather sanguine reaction to the twists and turns of the Greek saga throughout this year. Yes, there has been volatility. However, it has been fairly contained. Those expecting a major dip in peripheral bond market valuations (i.e. contagion) have been met with fairly muted moves. All the while, the Euro has proven to be surprisingly resilient. Of course, the future situation may evolve quite differently but it's looking somewhat unlikely.

Running parallel to the consensus view in financial markets that keeping Greece in should be still the goal, there is also a current of thought that sees Greece’s expulsion of the Euro as strengthening rather than weakening the single currency project. Irrespective of which view one takes on this, the one thing that all financial market participants agree on is that the pro-activist nature of the European Central Bank (ECB) has truly changed the rules of this game. To put it very succinctly, one should not mess around with a powerful central bank determined to do whatever it takes.

Despite this, many investors may be concerned about a potential repeat of the episodes of extreme volatility experienced in the 2010 to mid-2012 period. This is understandable. My personal view is that this would be a tail risk and hence highly unlikely to happen. However, one of the golden rules of investing is not to underestimate the potential for tail risks to surprise us.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

About Author

Jose Garcia Zarate

Jose Garcia Zarate  is Associate Director of Passive Strategies Research for Morningstar Europe