Investors Plow Assets Into Plucky PIIGS ETFs

Europe exchange traded funds, particularly the currency hedged variety, have been all the rage this year, but this month investors have been warming to funds tracking stocks in the PIIGS nations.

None of the single-country PIIGS ETFs are currency hedged funds, but that has not prevented investors from allocating over $300 million combined to the five PIIGS since the start of April. That includes $225.5 million as of April 27 to the iShares MSCI Spain Capped ETF (NYSEArca: EWP).

ETF investors were originally slow to get behind the periphery rally, but flows have started to gather pace over the last couple of months. The 42 ETFs that track periphery eurozone equities have seen €428m of inflows in April to date. This puts these funds on track for their best four weeks of inflows since last June,” according to a note from Markit posted by Chris Dieterich of Barron’s.

EWP has traded modestly higher this month as has the iShares MSCI Italy Capped ETF (NYSEArca: EWI), which has attracted over $86.1 million on a month-to-date basis through April 27. EWI currently trades around $15.40, but earlier this month, Strategic International Securities (SIS), a New York-based registered investment advisor, placed an $18 price target on the lone Italy ETF. [Upside Seen for Italy ETF]

“If the euro continues to weaken the EWI will underperform the FTSE MIB up 21.8% in Q1 2015 because of the strong dollar. This is in contrast to the 8.8% increase in EWI for Q1 2015, which highlights the importance of hedging the currency with these ETFs,” according to SIS.

Despite renewed concerns that Greece is on course to depart the Eurozone, investors have allocated $15 million to the Global X FTSE Greece 20 ETF (NYSEArca: GREK) this month. Like EWI and EWP, GREK has traded only slightly higher since the start of April, but since April 21, the lone Greece ETF has surged 16.3%. Still, Greece remains on the cusp of a sovereign debt default.