Like most economies around the world, Germany had a forgettable Q2, but there’s some light at the end of the tunnel. Consumer spending ticked higher, which could be key for Germany’s economy moving forward.

“The German economy contracted by a record 9.7% in the second quarter as consumer spending, company investments and exports all collapsed at the height of the COVID-19 pandemic, the statistics office said on Tuesday,” a Reuters report said. “The economic slump was much stronger than during the financial crisis more than a decade ago, and it represented the sharpest decline since Germany began to record quarterly GDP calculations in 1970, the office said.”

“The only bright spot was state consumption, which rose by 1.5% on the quarter due to the government’s coronavirus rescue programs, the office said,” the report added.

If Germany can rebound off more strong consumer spending, this could help exchange-traded funds (ETFs) like the Xtrackers MSCI Germany Hedged Equity ETF (DBGR). DBGR seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI Germany US Dollar Hedged Index.

The fund, using a “passive” or indexing investment approach, seeks investment results that correspond generally to the performance, before fees and expenses, of the underlying index, which is designed to track the performance of the German equity market while mitigating exposure to fluctuations between the value of the U.S. dollar and the euro. It will invest at least 80% of its total assets (but typically far more) in component securities of the underlying index.

^MSDE Chart

^MSDE data by YCharts

In the meantime, here are three other ETFs investors can look at:

  1. iShares MSCI Germany ETF (EWG): seeks to track the investment results of the MSCI Germany Index. The fund will at all times invest at least 80% of its assets in the securities of its underlying index and in depositary receipts representing securities in its underlying index. The underlying index primarily consists of stocks traded on the Frankfurt Stock Exchange. It will include large- and mid-capitalization companies and may change over time.
  2. iShares Currency Hedged MSCI Germany ETF (HEWG): seeks to track the investment results of the MSCI Germany 100% Hedged to USD Index. The index primarily consists of stocks traded on the Frankfurt Stock Exchange with the currency risk inherent in the securities included in the underlying index hedged to the U.S. dollar on a monthly basis.
  3. First Trust Germany AlphaDEX Fund (FGM): seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the NASDAQ AlphaDEX® Germany Index. The index is designed to select stocks from the NASDAQ Germany Index (the “base index”) that may generate positive alpha, or risk-adjusted returns, relative to traditional indices through the use of the AlphaDEX® selection methodology.

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