Getting localized exposure to broad-based European-focused exchange-traded funds (ETFs) typically means watching exposure to Germany. The country managed to sidestep a recession in Q1, giving investors hope if they’re looking to localized exposure to the largest economy in Europe in terms of gross domestic product (GDP).
The effects of restrictions due to Covid-19 and the Russia-Ukraine conflict weighed heavy on Germany’s economy in Q1. Nonetheless, the country saw a 0.2% growth in GDP despite the headwinds, which essentially fell in line with analysts’ estimates.
“War in Ukraine and the continuing COVID-19 pandemic have intensified existing distortions, including interruptions in supply chains and rising prices,” Georg Thiel, president of the Federal Statistical Office, said in a statement. “Despite difficult framework conditions in the global economy, the German economy started 2022 with a slight growth.”
Germany hasn’t been immune to the global pains of inflation. Rising energy costs were only exacerbated by Russia’s invasion of Ukraine as well as sanctions that forced German businesses like Volkswagen to halt production in Russia.
“Already now, we are seeing the effects of the war on the global economy, on raw materials, and on supply chains,” said Herbert Diess, the chief executive of Volkswagen, in a New York Times article back in March.
Getting Germany Exposure in 1 ETF
The German government is already forecasting that growth in 2022 will be reduced to 2.2% from initial forecasts from 3.6%. However, if Europe’s largest economy remains resilient, investors can look at getting targeted exposure to play a future bounce using the Global X DAX Germany ETF (DAX).
DAX seeks to provide investment results that closely correspond generally to the price and yield performance of the DAX® Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts (ADRs) and Global Depositary Receipts (“GDRs”) based on the securities in the underlying index.
The index tracks the segment of the largest and most actively traded companies – known as blue chips – on the German equities market. Overall, DAX gives investors:
- Efficient Access: DAX offers access to 30 of the largest and most liquid publicly traded companies in Germany, spanning a wide range of economic sectors.
- Targeted Exposure: The fund provides targeted exposure to Germany, the largest economy in Europe by GDP.
- Low-Cost Access: A net expense ratio of just 0.20%
The ETF is outpacing the broader MSCI Germany index within a three-year time frame. DAX is up almost 9% while the index is up 3.5%.
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