Germany: Stalwart ETF, Economy

October 1st at 6:00am by Tom Lydon

The iShares MSCI Germany Index (NYSEArca: EWG), an exchange traded fund tracking the Eurozone’s largest economy, has outperformed in 2012. The fund is up 18% year-to-date and has mirrored the country’s strength.

“Germany has been a stellar performer so far in 2012, up over 24%, roughly double the return for US equities. Stocks in the Netherlands have also posted a significant rally, up 14% so far this year, in line with a broader global benchmark,” Russ Koesterich wrote for the iShares blog. [Single-Country ETFs That Offer Yield]

As Europe continues to migrate towards more integration, riskier European investments will be in focus. Major structural reforms still need to be put in place and much is expected of European politicians. Banking sector reforms, labor market reform and fiscal integration to pool debt will all support the economy of Germany.

Some of the holdings in EWG that are domiciled in Germany have had stand out performances. Lanxess, a chemical company listed on the Frankfort stock exchange has gained 67%  this year. Listings on U.S. exchanges have also fared well such as Bayer, Volkswagon and SAP. [European ETFS Recover on Central Bank Hopes]

The Market Vectors Germany Small Cap ETF (NYSEArca: GERJ) has gained 24% in 2012. The ETF has grown alongside Germany’s economy, which expanded 0.5% in Q1 and 0.3% in Q2, reports Paul Whitfield for Investor’s Business Daily. [Small Cap ETFs for a Eurozone Recovery]

The new found optimism for Germany’s economy has been due to the ECB’s promise to stabilize European debt with unlimited bond buying. As Germany continues to help out the shakier economies of the Eurozone, the trend toward accommodation and integration will pay off for the country.

iShares MSCI Germany Index

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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