For much of 2013, European shares lagged the markets of other
developed nations. Shares in Europe were rangebound while their
counterparts in the U.S, Japan, and elsewhere saw soaring asset
However, the further we have gone into summer, the better it
has looked for Europe. The continent is seeing many of its top
markets rebound strongly, while so-called 'PIIGS' nations have
seen a reversal too.
The perception regarding the continent is starting the change,
the euro currency is looking more firm, and growth rates are
actually starting to pick up as well. In fact, the euro zone
recently saw preliminary GDP growth figures beat estimates and
come in at 0.3% for the second quarter over the first. While this
might not sound like a lot,
it does end an 18-month contraction
, and could herald a new era of growth for the region.
This shift may even lead to some much needed job growth on the
continent, hopefully creating a 'virtuous cycle' in a number of
key markets that have been beaten down over the past few months
all the European Equity ETFs
Given this changing perception, some of the worst performing
markets in years past have led on the upswing over the past
month. These markets, while still uncertain for the long-term,
may have some more room to run from a momentum perspective, and
could be worth a closer look for those seeking European
investments in the short run.
Below, we highlight four country ETFs from the region that
have been among the top performers in Europe. This group has
managed to turn it around lately and all four are beating out
both the S&P 500, as well as broad European ETFs like
, over the past one month time frame:
iShares MSCI Italy Capped ETF (
While the perception might not be too favorable for the
Italian economy, the country has come back strong in recent
weeks. One way to play this trend is with EWI, an ETF that
follows the MSCI Italy 25/50 Index, holding roughly two dozen
Italian firms in its basket.
The portfolio is a bit focused from a sector perspective, with
financials (32%), energy (25%), and industrials (15%), taking the
three biggest spots. The fund also has a large cap focus, while
Eni takes the top spot at nearly 20% of the portfolio (see
Bet on the Euro with these 3 ETFs
EWI is just barely break even over the past three months,
posting a 0.6% gain, though its performance in the past one month
has been quite solid at 6.9%.
iShares MSCI Belgium Capped ETF (
To target the often overlooked market of Belgium, investors
have this ETF from iShares. The product tracks the MSCI Belgium
IMI 25/50 Index, giving exposure to about 43 companies in the
The product does have some concentration issues though, as
Anheuser-Busch accounts for 21.6% of the portfolio on its own.
Beyond that, financial services, food retail, and commodity
chemicals make up big chunks of this large cap focused ETF.
Over the past three months, EWK has seen a solid gain of 4.9%.
Most of the gains were in the past month though as the trailing
30 days saw gains of 5.9%.
iShares MSCI Austria Capped ETF (
Another overlooked market, though one that has significant
Eastern European exposure, is Austria. Investors can target this
nation with EWO, a product that has about 27 stocks in its
basket, and charges investors 50 basis points a year in fees (see
3 Forgotten Ways to Play Europe with ETFs
Large caps make up just under two-thirds of the assets, while
sectors are focused on financials, industrials and energy. Like
other funds on the list, EWO is a bit concentrated with Erste
Group and OMV combining to make up nearly one-fourth of the
Over the past three months, this Austrian ETF has added 2.7%,
a respectable figure. However, the gains in the past month have
been especially solid, as these come in at 8.7%.
iShares MSCI Spain Capped ETF (
The best performer on this list comes to us from Spain. The
country can be targeted with EWP, an ETF that holds two dozen
Spanish companies, charging investors 50 basis points a year for
Large caps make up about 75% of the assets in this product,
but the real item to note is that financials make up 44% of
assets, including two of the top three holdings. These high beta
securities are likely what helped EWP outperform lately, and
especially thanks to Banco Santander and BBVA which, along with
Telefonica, account for 44.7% of assets on their own.
EWP has been a solid performer in the trailing three month
time frame, adding about 4.8% in the period. The real surge has
taken place in the past four weeks though, as in this time
period, EWP has moved higher by 9.9%.
Despite some sluggish trading earlier in the year, European
markets have come back strong in recent weeks. Funds tracking
these nations have outperformed many other developed market
counterparts as a firmer euro and a return to growth have
rekindled investor interest in the region (see
High Dividend ETFs to Buy Even If the Fed
Whether this trend can continue over the long haul is another
question, as all the nations highlighted have some structural
issues that they still need to work out, so these might not be
the best picks for long term investors.
Still, if current trends can remain in place, these four
may continue to see a solid bounce back to close out the summer,
especially if optimism continues over the new European growth
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ISHARS-ITALY (EWI): ETF Research Reports
ISHARS-BELGIUM (EWK): ETF Research Reports
ISHARS-AUSTRIA (EWO): ETF Research Reports
ISHARS-SPAIN (EWP): ETF Research Reports
ISHARS-EMU IDX (EZU): ETF Research Reports
VANGD-FTSE EUR (VGK): ETF Research Reports
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