ETF Trends
ETF Trends

The iShares MSCI Germany ETF (NYSEArca: EWG), the largest exchange traded fund tracking German equities listed in the U.S., and the Xtrackers Germany Equity ETF (Cboe: GRMY) are among the Germany ETFs investors should monitor in the days ahead.

Improving economic conditions and strengthening company earnings in Europe are signals that diversified exchange traded fund investors should keep in mind when looking for areas of potential growth after a multi-year run in U.S. markets leaves less opportunities at home.

“On Sunday, March 4, members of Germany’s Social Democrats (SPD) will unveil the results of a vote on a “grand coalition” with Chancellor Angela Merkel’s more conservative Christian Democrats (CDU).  Ahead of the reveal  — and with European stocks in a tizzy on trade war fears — the iShares MSCI Germany ETF (EWG) is pacing for its lowest close in nearly six months,” according to Schaeffer’s Investment Research. “However, if history is any indicator, the German exchange-traded fund (ETF) could be on the verge of a pop higher.”

GRMY seeks to track the Nasdaq Germany Large Mid Cap Index, which is designed to track the performance of the German equity market.

Recently, Deutsche Asset Management lowered the annual fee on GRMY to 0.09%, making it one of the least expensive Germany ETFs in the U.S. and far less expensive than the rival EWG.

Historical data suggest March is often kind to German stocks. EWG is lower by 4% year-to-date while GRMY is down just 1%.

“While the results of the SPD vote will likely impact EWG’s trajectory, the fund has history on its side — in the short term, at least. Since inception, the shares have averaged a March gain of 1.7%, followed by an April gain of 3.1% — tied with December for its best month of the year — according to Schaeffer’s Quantitative Analyst Chris Prybal. From current levels, another 1.7% gain this month would put EWG around $32.26, and a 3.1% gain from there would put the fund at $33.26. That’s not quite in new-high territory, but would put the ETF back in the black year-to-date,” according to Schaeffer’s.

For more information on European markets, visit our Europe category.