With Swiss stocks on a roll to start 2018, the same is true of the iShares MSCI Switzerland Capped ETF (NYSEArca: EWL). EWL, the largest exchange traded fund dedicated to stocks in Switzerland, gained more than 2% last week.
Last Friday, EWL was one of nearly 300 ETFs to hit record highs as stocks in Switzerland did the same for the first time in a decade.
“The SMI on Friday climbed to a fresh intraday peak of 9,557.06, topping its June 2007 high. Its heavy weighting of defensive shares such as drugmaker Novartis AG and food company Nestle SA have made it a 2018 favourite at Morgan Stanley, whose strategists predict ‘trickier’ year for global equities and are overweight Swiss shares,” reports Bloomberg.
The $1.29 billion EWL holds 37 stocks, but just three – Nestle, Novartis AG and Roche AG – combine for almost 44% of the ETF’s weight.
“Switzerland’s benchmark climbed 14 percent last year, almost twice as much as the Stoxx 600. Novartis, Nestle and Roche Holding AG, which comprise more than half the index, also contributed the most to gains,” according to Bloomberg. “A weaker franc in 2018 will offer further support for Swiss equities to outperform, Morgan Stanley strategists led by Graham Secker wrote in a Nov. 26 note. They also noted good earnings momentum and an indicator of economic output near to a four-year high relative to Europe.”
EWL gained 23.4% last year, but trailed the S&P Europe 350 Index. The First Trust Switzerland AlphaDEX Fund (NYSEArca: FSZ) gained more than 3% last week and like EWL, FSZ resides near record highs.
Like the other AlphaDEX ETFs from First Trust, FSZ is comprised of stocks that are ranked by a variety of growth and value factors including price appreciation value to price, cash flow to price and return on assets.
“While the SMI may have lagged some peers in rising to a record in recent years, it’s not the last to achieve it. France’s CAC 40 Index and benchmarks in peripheral markets such as Italy and Spain remain well below pre-crisis highs,” reports Bloomberg.
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