A recent publication from the Kellogg School of Management at Northwestern University discussed the benefits of the post-war reconstruction as a good investment. They use post-World War II as an example of how much money should be spent and how it benefits the war-torn country very quickly.
The paper pointed to specifically The Marshall Plan following World War II. The Marshall Plan had two goals; European economic recovery and the containment of the Soviet Union. Stabilizing Europe’s economies were vital to promoting income growth around the world and entrenching democracies in Europe.
Whenever the Ukraine War is over, I think the Marshall Plan should be adopted identically from what happened 80 years ago since we will essentially be trying to do the same thing in Ukraine as we did all over Europe back then.
However, it will be much more expensive this time around. Post World War II, American leaders sent roughly $130 billion (In 2010 dollars) to help with the European reconstruction of railways, utilities, roads, and airports, the same type of facilities that will need to be rebuilt in Ukraine.
However, economists estimate that restoring the lost infrastructure in Ukraine will cost at least $200 billion, and that figure will climb the longer the war continues. And remember, $200 billion is to rebuild Ukraine.
After World War II, the Marshall Plan not only gave funds to countries that had been friendly to the US during the war but also to Germany and Italy.
The belief back then and now is that not helping to rejuvenate all parties involved after the war ended would only cause more issues later down the road. That has some people thinking that Russia and even Belarus could see new investments from outsiders when the war ends, perhaps not in a straightforward financial manner but in other ways, such as new business opportunities and deals.
At this time, no money has started flowing back into Ukraine to help rebuild the country or increase business and the economy.
But, a deal has already been made between Ukrainian President Volodymr Zelenskyy and BlackRock’s (BLK) CEO Larry Fink that has BlackRock coordinating the investments to help rebuild Ukraine when the war is over.
This means that BlackRock will have a front seat to the show regarding rebuilding Ukraine. We can assume BlackRock will know when, where, and how much money is being spent on different things all throughout Ukraine.
From an investment standpoint, this will possibly give BlackRock a little investment edge. So you could buy either BlackRock stock directly or through a few different Exchange Traded Funds, which helps reduce single-stock exposure risk.
Three ETFs that have the most significant percentage of their assets in BlackRock are the Schwab U.S. Dividend Equity ETF (SCHD), the R3 Global Dividend Growth ETF (GDVD), and the SmartETFs Dividend Builder ETF (DIVS).
Another way you could play the end of the war would be with an ETF that has a decent amount of its assets directly invested in Ukraine.
The FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE) has most of its assets invested in Ukraine, but it is small at just 0.11%.
The next three ETFs with the most significant amount of their assets invested in Ukraine are the Vanguard FTSE All-World ex-US Small Cap ETF (VSS), the Schwab International Small-Cap Equity ETF (SCHC), and the Vanguard FTSE Europe ETF (VGK). The Ukraine weighting for each of the above funds is 0.03%, 0.03%, and 0.01%.
So you can see that investing directly in ETFs with Ukraine exposure, unfortunately, is currently very difficult since no ETFs now exist that offer direct 100% Ukraine exposure.
However, you could start investing today in Ukraine through any of the options mentioned above or watch and wait for someone to offer a more direct Ukraine ETF in the future.
P.S. Check this page regularly, as I will post in the comments if a Ukraine Focused ETF does emerge. And remember, any reader can always do the same or leave comments about anything mentioned in the article.
Matt Thalman
INO.com Contributor
Follow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
