A Star Among Europe ETFs

In a year of volatility for Europe single-country exchange traded funds, the iShares MSCI Ireland Capped ETF (NYSEArca: EIRL) has stood tall, surging nearly 19% year-to-date. However, there is more to the story when it comes the steadiness of EIRL and the Irish economy.

Ireland’s economic renaissance has the economy there larger than at the height of its so-called Celtic Tiger boom. Ireland’s central bank pointed to support from domestic demand as robust retail sales and an improved labor market bolstered the economy.

“Ireland’s performance over the past four years stands in stark contrast to its peripheral peers in the euro zone. Portuguese stocks are down about 12 percent, equities in Italy are up 32 percent, and Spain’s are up 15 percent. Unsurprisingly, debt-ridden Greece has been the worst performer, down 33 percent since the debt crisis,” according to Bloomberg.

Two years ago, Ireland need an 85 billion euro, or $115.5 billion, bailout after its largest banks collapsed in 2010 during the so-called Eurozone financial crisis. The bailout also came with stringent austerity measures to make sure the economy stayed on course. However, the economy there and EIRL have thrived since then. [Ireland ETF Quietly Outperforms Other Developed Markets]

“It’s also interesting to take note of the fund’s sector allocations. Interestingly, the heaviest allocation belongs to the Materials sector, which is usually very sensitive to the business cycle. This is followed by the more defensive Consumer Staples, then Financials and then Industrials. Healthcare and Consumer Discretionary middleweights follow. The observant investor may notice that many global pharmaceutical or healthcare companies have reestablished themselves in Ireland,” according to a Seeking Alpha analysis of EIRL.