Thanks to ultra-loose monetary policy, Europe has been one of the top investment destinations this year. While Germany certainly has got an upper hand and is among the most favored, the PIIGS (Portugal, Ireland, Italy, Greece and Spain) group of nations is also seeing a surge in interest due to the faster-than-expected recovery in the Euro zone (read: 5 Leveraged Europe ETFs to Watch on Greece Deal ).
In fact, Spain's economy grew nearly 4% in the first half of 2015 - brightening the chances of the GDP returning to the pre-crisis level by the end of 2016, per Economy Minister Luis de Guindos. The return to Spain's growth path has been the brainchild of Germany. Spain has sincerely been following the austerity measures outlined by Germany to restore its economy back to life.
Spain's government has lifted its economic forecast and now expects the Spanish economy to grow by 3.3% this year , up from its earlier forecast of 3.1% growth. It expects the economy to expand by 3% in 2016, ahead of the 2.7% growth predicted by The Bank of Spain. The Bank of Spain currently expects its economy to expand by 3.1% in 2015 (read: 3 European ETFs Leading the Market Higher ).
Further, the government expects unemployment to fall below 20% next year, and to 15.5% by 2017.
Given these optimistic GDP predictions, Spain ETFs have seen a surge in interest lately. In fact, iShares MSCI Spain Capped ETF (EWP) has accumulated $15.51 million in assets under management since July 1. Moreover, all the three Spain ETFs have clocked gains in excess of 6% in the last one week.
Below we have highlighted three Spain ETFs in details. These products might continue to see gains fueled by the bullish GDP forecasts (read: Grexit or Not, Buy These 3 European ETFs ).
EWP in Focus
The fund tracks the MSCI Spain 25/50 index to provide exposure to 29 large and mid-sized companies in Spain. The product is quite concentrated in its top three holdings with roughly 45% exposure. Sector-wise, Financials dominates the fund with a little less than half of the fund assets, followed by double-digit allocation to Telecom, Utilities and Industrials.
The fund is quite popular with $1.8 billion in assets and an average trading volume of 1.5 million shares. EWP has a 30-Day SEC Yield and charges 47 basis points as fees. The fund has returned 6.43% in the past one week.
SPDR MSCI Spain Quality Mix ETF ( QESP )
The fund tracks the performance of companies domiciled in Spain and aims to represent the performance of a combination of three factors - value, quality and low volatility. The top two stocks - Banco Santander and Telefonica - dominate the fund with double-digit exposure.
Financials occupies the bulk with more than one-third allocation, followed by Utilities and Industrials. The fund has gained 6.9% in the past one week and charges 30 basis points as fees (see all European Equity ETFs here ).
Currency Hedged MSCI Spain ETF (HEWP)
Launched recently, the fund seeks to track the MSCI Spain 25/50 100% Hedged to USD Index to provide exposure to large- and mid-capitalization Spanish equities while mitigating exposure to fluctuations between the value of the euro and the U.S. dollar.
With this focus, the fund holds EWP ETF in its portfolio and also holds EUR/USD forward contracts. HEWP manages a small asset base of $2.5 million and charges 51 basis points as fees.
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