At least not in 2013. The eurozone is contending with a
jobless rate of around 12 percent, but when it comes to
tracking European nations (both eurozone members and those that
are not), the returns are not always tightly correlated to a
country's employment picture.
This is something of a departure from what has been
seen in other parts of the world
. For example, Egypt and South Africa are home to dismal rates of
unemployment. In 2013, the Market Vectors Egypt ETF (NYSE:
) and the iShares MSCI South Africa Index Fund (NYSE:
) have struggled, performing worse than major diversified
emerging markets ETFs such as the iShares MSCI Emerging Markets
Index Fund (NYSE:
In Europe, however, a rosy jobs picture is not always a
guarantee of stellar ETF returns. Likewise, some ETFs tracking
nations with rancid employment situations have not been as bad
some investors may have imagined at the start of the year.
Upper Crust Just two Eurozone members, Austria and Germany,
have unemployment rates below six percent,
according to Stratfor data
. In fact, Austria's jobless rate is below five percent at 4.7
That statistic has been of little help to the iShares MSCI
Austria Capped Investable Market Index Fund (NYSE:
), which has traded slightly lower this year. Germany, the
eurozone's largest economy, has a jobless rate of 5.4 percent.
Obviously, that is much worse than Austria's, but still
excellent, regionally speaking. The iShares MSCI Germany Index
) is up nearly seven percent year-to-date.
Bottom Feeders When it comes to European nations that are
investable via ETFs that also have terrible unemployment
situations, Greece and Spain take the cake. As the Stratfor data
indicate, the average unemployment rate between the two PIIGS
members is nearly 27 percent.
Investors have not been bothered by that this year as the
iShares MSCI Spain Capped Index Fund (NYSE:
) and the Global X FTSE Greece 20 ETF (NYSE:
) are each up almost six percent. GREK's performance is all the
more impressive when considering Greece has had to deal with the
situation in Cyprus and a
demotion to emerging markets status
by one major index provider.
In The Middle There are 11 European nations with jobless rates
ranging from six percent to 10 percent and six are accessible
through country-specific ETFs. That list is comprised of the
Netherlands (6.4 percent unemployment), Denmark (7.2 percent),
the U.K. (7.8 percent), Belgium (8.2 percent), Finland (8.2
percent) and Sweden (8.4 percent).
That is an average of 7.7 percent. The average return for a
group of ETFs comprised of iShares MSCI Netherlands Investable
Market Index Fund (NYSE:
), iShares MSCI Denmark Capped Investable Market Index Fund
(BATS: EDEN), iShares MSCI Belgium Capped Investable Market Index
), iShares MSCI U.K. Index Fund (NYSE:
), iShares MSCI Sweden Index Fund (NYSE:
) and the iShares MSCI Finland Capped Investable Market Index
) is just over 9.2 percent.
The worst performer of this group is EWN with a year-to-date
gain of 6.3 percent. The best is EDEN, which is up over 13
percent. Danish equities have benefited from Denmark's
negative interest rates and AAA credit rating
Not Good, Not Bad In normal circumstances, an unemployment
rate of 11 percent would be considered bad, but hey, this is
Europe so 11 percent is better than average. At least that is
what France and Italy, the eurozone's second- and third-largest
economies can say. France's jobless rate is 11 percent and
Italy's is 11.5 percent, according to Stratfor.
In terms of ETF returns, the iShares MSCI Italy Index Fund
) is barely higher this year, but it is not in the red, either.
The iShares MSCI France Index Fund (NYSE:
) is up 7.1 percent. Also laboring in the 10 percent to 20
percent rate of joblessness in Europe is Ireland at 14.1 percent.
Clearly, the iShares MSCI Ireland Capped Investable Market Index
) has had the luck of the Irish on its side because the ETF has
surged 14.3 percent this year.
For more on ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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