The Netherlands country-specific exchange traded fund could be a good way to capture a strengthening economy that Standard & Poor’s just upgraded to a sterling triple-A rating.
Investors looking for lower beta single-country exposure to Eurozone economies have some credible options, including the iShares MSCI Netherlands ETF (NYSEArca: EWN), the lone U.S.-listed exchange traded fund dedicated to Dutch stocks. [A Europe ETF With Limited Risk And Solid Rewards]
EWN has gained 1.2% over the past week and is up 5.4% year-to-date. Meanwhile, non-hedged broader Eurozone ETFs, including the iShares MSCI EMU ETF (NYSEArca: EZU) and the SPDR EURO STOXX 50 (NYSEArca: FEZ), are 2.3% and 0.2% higher, respectively, year-to-date.
EWN is home to 48 stocks, including some names familiar U.S. investors, such as Unilever (NYSE: UNV) and ING Groep (NYSE: ING). The ETF is also heavy on the consumer staple sector with a 32.0% weight, followed by financials 21.3% and industrials 13.8%. However, EWN is not currency hedged, which could expose investors to some currency risk if the euro continues to depreciate against the dollar.
Reflecting the improved outlook for Netherlands, S&P recently upgraded the Dutch rating to AAA from AA+, reports Corina Ruhe for Bloomberg.
“The economic recovery in the Netherlands is, and future growth prospects are, stronger than we had previously expected,” S&P said in a statement.
S&P previously downgraded Netherlands to AA+ in 2013 on growth concerns while Fitch and Moody’s ratings agencies have maintained top ratings for the Eurozone member. Germany and Luxembourg ar the only other Eurozone states with perfect marks from all three ratings companies.