How does Greece fit in an investor’s portfolio?

• Greece provides international diversification to investors with the comfort of remaining invested in a western country with the Euro as its local and stable currency.  

• We consider Greece an absolute return play for those that can be opportunistic investors with a number of domestic catalysts. 

• The potential political catalyst provides an idiosyncratic event which could decouple Greece from global markets and provide uncorrelated returns.

• As countries around the world continue to struggle with populism, we expect Greece to be the first to enter the post-populist era, returning to a more economically practical, growth-friendly policy mix.  The country has seen economic and political cycles in its past and this will continue in its future.  Long term data shows that disciplined investors who follow a crisis have typically been rewarded with several years of growth in the years that follow.

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How to Invest in Greece?

• Given Greece’s size as €180bn economy, it does not offer the capital markets depth found in the U.S, certainly, or even other developed or larger emerging markets.  

• Greek government bonds are traded actively across all brokers while the local Athens stock exchange trades the major Greek companies.  Credit markets offer smaller sized bond issues of low coupons which are highly valued by buyers due to their safety and thus typically bought and held.  

• The U.S. offers an exchange traded fund (NYSE: GREK), which holds the largest Greek companies (domestic players and those domiciled in the country).  

• With Greek real estate prices just now beginning to increase, there has been increased interest from foreign investors to buy Greek real estate.

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Direct Investments:

• Public Equities:  Local equities trade on the Athens Exchange

• Government Bonds:  Greek government bonds trade on various exchanges

• Corporate Bonds:  Greek corporate bonds trade on various exchanges or OTC

• Real Estate:  Real estate trades privately or can be accessed via REICs

• Private Equity:  Private equity transactions are common in Greece and the beginning of the NPL market has drawn much interest

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Managed Investments:

• There are few actively managed funds that focus specifically on Greece.  Greek exposure is typically held as a minor part of a broader asset portfolio mix.  Domestic Greek mutual funds exist but tend to be small and inaccessible outside the country. Waterwheel manages a Greek focused vehicle which may take long or short positions across asset classes with the objective of benefitting from a Greek economic recovery. 

• Waterwheel also offers direct co-investment opportunities in public and private offerings which it feels are attractive investments but cannot be placed into its main vehicle.

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