The iShares MSCI Australia ETF (NYSEArca: EWA) entered Monday with a year-to-date gain of 6.7%, easily making it one of this year’s best-performing non-leveraged, single-country exchange traded funds tracking a developed market.

However, some market observers are concerned that Australia’s interest rates, which are high compared to other developed markets, but low by the country’s historical standards, are affecting banks’ profitability. That is relevant to EWA because the largest Australia ETF devotes 43% of its weight to financial services stocks, more than two and a half times, the ETF’s second-largest sector allocation.

Thanks to comparatively high interest rates, Australia ETFs like EWA sport enticing dividend yields, which can help investors generate current income while expanding the international portions of their portfolios. EWA has a trailing 12-month dividend yield of 4%, or nearly double the comparable yield on the S&P 500.

“That euphoria has ended abruptly as banks dragged down the country’s main index, making it the worst-performing major Asian stock gauge. The nation’s biggest lenders are getting hit as concern grows that their share prices rose too far, too fast given uncertainty around changes to regulation in a low-growth cycle,” reports Bloomberg.

While the Reserve Bank of Australia (RBA) may be at the end of its easing cycle, there are few, if any, signs that the central bank there is poised to embark upon a tightening cycle.

Australia’s looser monetary policy could support the economy but weigh on the AUD. Consequently, investors may track the markets through currency-hedged ETFs that try to mitigate the negative effects of a weakening Aussie, including the iShares Currency Hedged MSCI Australia ETF (NYSEArca: HAUD) and Deutsche X-trackers MSCI Australia Hedged Equity ETF (NYSEArca: DBAU).

Although it appears unlikely that RBA will boost borrowing costs in the near-term, the CurrencyShares Australian Dollar Trust (NYSEArca: FXA), which tracks the Aussie against the U.S. dollar, is up 6.6% this year. That makes FXA one of 2017’s best-performing currency ETFs.

“Differing paths for interest rates Down Under and in the U.S. is also removing something that’s been very valuable to foreign investors: Australia’s yield premium. The extra return that bond investors demand of the country’s debt relative to what they receive on U.S. Treasuries has reached the lowest in a decade and a half,” reports Bloomberg.

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