3 ETFs Crushing Eurozone Competition
The Euro zone has seen modest GDP growth for another quarter, accelerating 0.3% in Q4, on the heels of rising exports and investments. This marks an improvement from the previous quarter’s growth of 0.1% and indicates that the worst might be over for this region.
Slovenia led the way for Q4 growth at 1.2%, followed by the two largest economies – Germany and France – which expanded 0.4% and 0.3%, respectively (read: Is This a Better Europe ETF?).
Manufacturing and service activity, as depicted by Markit’s Flash Eurozone Composite Purchasing Managers Index, rose to 53.3 in February from 52.9 in January. This marks the fastest growth in nearly three years. Unemployment across the Euro zone remained unchanged at the near-record high of 12%.
ADW Capital’s 2020 letter: Long CDON, the future Amazon of the Nordics
ADW Capital Partners was up 119.2% for 2020, compared to a 13.77% gain for the S&P 500, an 11.17% increase for the Russell 2000, and an 8.62% return for the Russell 2000 Value Index. The fund reports an annualized return of 24.63% since its inception in 2005. Q4 2020 hedge fund letters, conferences and more Read More
Inflation has stabilized over the past three months at 0.8% but is much below the European Central Bank (ECB) target of under 2.0%. Though this reflects a prolonged period of low inflation, it reduces fears of the deflationary conditions.
However, consumer confidence in the region unexpectedly dropped to -12.7 in February from -11.7 in January, as per the flash estimate by the European Commission. This represents the first decline in three months.
All the data indicates to a slow but steady recovery for the single currency bloc. The European Commission last month raised the Euro zone’s GDP growth outlook from 1.1% to 1.2% for this year. Most of the growth will likely come from Germany (1.8%), France (1%) and Italy (0.6%) (read: Ride Europe Higher with This Top Ranked ETF).
Driven by optimism in the Euro zone recovery, the ECB kept its rate unchanged at 0.25% last week. The news propelled the European stocks higher and strengthened the euro against the basket of major currencies. As a result, the ETFs tracking these countries are also riding high.
Below, we have highlighted three ETFs that gained near double digits over the trailing one-month and are crushing the Euro zone competition (see: all the European ETFs here).
iShares MSCI Ireland Capped ETF (NYSE:EIRL)
This fund provides exposure to Irish stocks by tracking the MSCI All Ireland Capped Index and has accumulated $162.5 million in AUM. It charges 48 bps in fees per year from investors and trades in low average daily volume of less than 42,000 shares. The fund holds 24 securities with heavy concentration in the top three firms – CRH Plc, Kerry Group and Bank of Ireland – as these make up for a combined 44% of assets.
Additionally, the product is skewed toward materials at roughly 26%, while consumer staples and industrials take the next two spots. The Ireland ETF added over 10% over the trailing one month and has a Zacks ETF Rank of 2 or ‘Buy’ rating (read: Euro Zone Recovery Puts Ireland ETF in Focus).
iShares MSCI Belgium Capped ETF (NYSE:EWK)
This fund targets the Belgian market and tracks the MSCI Belgium IMI 25/50 Index. Holding 43 stocks in its basket, the product has some concentration issues as Anheuser-Busch accounts for 21.6% of the portfolio while other firms do not hold more than 8.2% share. Further, the fund is tilted toward consumer staples and financial sectors with just under 30% share each.
The ETF is often overlooked by investors, as it has accumulated just $74 million in its asset base. The fund trades in average daily volume of nearly 64,000 shares while charges 48 bps in annual fees and expenses. Over the past months, EWK has been up nearly 9.1% and has a Zacks ETF Rank of 2 or ‘Buy’ rating.
Global X FTSE Portugal 20 ETF (NYSE:PGAL)
This product provides concentrated exposure to the biggest 20 Portuguese stocks and follows the FTSE Portugal 20 Index. The fund has amassed $15.7 million since its debut four months ago. Volume is light at under 18,000 shares a day and expense ratio came in at 0.55% (read: 2014: The Year of the Portugal ETF?).
The fund is heavily concentrated on the top firm – EDP – at under 20% of total assets, closely followed by Galp Energia (13.56%) and Jeronimo Martins (10.97%). From a sector perspective, utilities and consumer staples dominate the fund’s portfolio at nearly 24% and 19%, respectively. The ETF has gained nearly 10% in the trailing one month.
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