Stock Market News

Largest Single-Country European Fund Targets German Equities

Just as there are multiple ways to play domestic markets, there also are many funds focused on international equities. Today’s featured exchange-traded fund (ETF), the iShares MSCI Germany ETF (EWG), is the largest one in Europe devoted to particular country.

For investors who are interested in the German stock market, this fund is one of the most liquid options available. It invests primarily in large-cap German companies, but also includes some mid-cap stocks.

Even though EWG is the largest ETF available that targets a specific European country, that fact does not mean that its country of focus, Germany, has the highest total capitalization among European stock markets. In fact, that honor belongs to the United Kingdom. This fund simply has the most assets among similar single-country funds. A key reason is that there are multiple ETF options for most developed countries’ markets.

EWG has performed quite well during the last 12 months, which makes sense as the euro zone has, in general, been experiencing a liberal monetary policy and a reduction in headwinds, EWG’s performance has been especially strong since December 2016, along with that of other global markets. But this does not mean that the road higher is devoid of bumps. The fund is up 20.7% during the last 12 months, has an expense ratio of 0.48% and pays out roughly a 2.25% dividend.

EWG currently holds 60 stocks, a number that makes the fund somewhat diverse as a single-country investment vehicle. In terms of sector allocations, the ones most strongly represented are Consumer Discretionary, 18.63%; Materials, 14.53%; and Financials, 14.17%.

The top 10 largest holdings of this fund make up about 57% of its assets, meaning that price movements in the top holdings can substantially impact returns. Among these are Siemens AG, 8.45%; SAR SE, 7.77%; Bayer AG, 7.72%; Basf SE, 7.26%; and Allianz SE, 6.75%.

If you are looking for a simple, no-frills way to gain exposure to the German market, the iShares MSCI Germany ETF (EWG) is worth including in your search to decide if it is a good investment for you.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.