Invest in Greece while it’s still cheap

After this summer, investing in Greece may seem less contrarian than plain mad. The market is down by nearly 50% on last year's (it's back at the same level it was three years ago, at the height of eurozone fears). However, fresh elections are due in just over a fortnight's time, with talks on possible debt relief to follow. This means the choice between a substantial write-down of debt, or a euro exit, both of which should benefit the nation in the longer run, cannot be postponed any longer. Meanwhile, surprisingly strong second-quarter GDP data suggest the economy has the potential to recover once the disruption is over.

And from an investor's point of view, Greece is dirt-cheap. It's on a cyclically adjusted price/earnings ratio of just two. For perspective, the next cheapest market (Russia) is on a Cape of just under five, while the UK's is more than 12. The Greek market is also cheap on current measures, trading at a 46% discount to the value of its net assets, compared with a 75% premium for the FTSE 100. Sure, it's not a market to bet the house on. But buying cheap stocks typically pays off in the long run.

If you feel bold, the simplest way in is via an exchange-traded fund (ETF) that follows the Athex 20, the 20 largest Greek companies by market capitalisation. Lyxor ETF FTSE Athex 20 (Paris: GRE) is one option, but the Global X FTSE Greece 20 ETF (NYSE Arca: GREK) is also worth considering. It has a slightly higher management fee of 0.55% (Lyxor's is 0.45%), but it kept trading during the capital controls this year. This is worth remembering if Greece does leave the single currency or has another stand-off with its creditors, then restrictions are likely to be imposed again. The Athex 20 includes everything from a bottling firm to a lottery operator, and has relatively low exposure to banks. But if you want a slightly more diversified ETF, you may prefer the Lyxor UCITS ETF FTSE Atex Large Cap (Paris: INGRE), which covers the 25 largest companies.

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Greece's woes have also hit property prices. But if these bottom out with the economy, it could be good for Greece-focused investment trust Dolphin Capital Investors (LSE: DCI), which owns several properties in Porto Heli, including two resorts, golf courses and seafront villas. It trades at six times current earnings.