Back to top

German ETFs in Focus as Q2 GDP Growth Accelerates

Read MoreHide Full Article
Germany’s economy accelerated in the second quarter on rising exports supported by a weaker euro. Data from Federal Statistical Office shows that the country’s gross domestic product grew at a quarterly clip of 0.5%(see all European Equity ETFs).
 
Imports and exports rose 1.7% and 0.7%, respectively, from the first quarter. There was expansion in the consumption patterns of household and government from the previous quarter by 0.3% and 0.6%, respectively. The investments in fixed capital were moderate with the quarterly growth rate slowing to 0.3%, reflecting a sharp fall from 2.3% growth in the first quarter.
 
The German economy has been performing really well so far on wise economic management and structural reforms. The growth rates are expected to be steady and the unemployment levels very low.  The rising wage rate scenario would allow for more private spending and escalated imports will help in bringing the large current account surplus down which was nearly 8% of GDP in 2017. The sizable savings buffer allows the fiscal policy to support other parts of the economy. The Coalition agreement of the Government allows for 5.95 billion Euros in education, research and digitization by 2021 as IMF indicates high chances of an average German job lost due to automation, hence a dire need of investment in the human, physical and digital capital. 
 
An ageing population will result in shrinkage of the labor force participation numbers by 2020. The supportive monetary policy coupled with immigration flows and strong job market has driven the demand for private housing. The prices in the major cities of Hamburg, Munich and Frankfurt have risen quickly as compared to the other European countries. About 4 billion euros was the agreed amount of investment. There was a jump of 2.1 points  in Germany’s private sector as the confidence level  increased post ceasefire in the ongoing trade conflicts between the United States and the European Union (read: Are Alarm Bells Ringing for These Europe ETFs?)
 
July saw consumer prices rise by 0.3% over June, according to Federal Statistics Office. Inflation was at 2% in July and the average being 1.7% for the third consecutive month. The harmonized inflation was (HICP) was stable in July at 2.1%. The apex bank expects HICP to be 1.8% and 1.7% in 2018 and 2019, respectively (read: Is the Dollar Rally Over? ETFs in Focus).
 
The upbeat economic data of the economy puts the following ETFs in focus:
 
iShares MSCI Germany ETF (EWG - Free Report)
 
This fund tracks the MSCI Germany Index. The target is on large and mid-sized companies. There are 67 holdings in the basket, with (SAP - Free Report)  occupying the top weight of 8.57%. AUM is $3.45 billion and the expense ratio charged 0.49%. The fund has gained 3.94% in the past week. It has a Zacks ETF Rank of #3 (Hold) with a Medium risk outlook.
 
iShares Currency Hedged MSCI Germany ETF (HEWG - Free Report)
 
It tracks the MSCI Germany 100% Hedged to USD Index. It seeks to mitigate the fluctuations between the euro and U.S. dollar value.  AUM is $362 million and the expense ratio 0.53%.  The fund generated 2.08% return in the past week.  It has a Zacks ETF Rank of #2 (Buy) with a Medium risk outlook.
 
First Trust Germany AlphaDEX Fund (FGM - Free Report)
 
It tracks the NASDAQ AlphaDEX Germany Index. There are 39 holdings in the basket and the top spot is occupied by Porsche Automobile Holding SE weight of 4.7%. AUM is $235 million and the expense ratio 0.8%. The fund gained 4.38% in the past week. It has a Zacks ETF Rank of #3 with a Medium risk outlook.
 
WisdomTree Germany Hedged Equity Fund (DXGE - Free Report)
 
It tracks the WisdomTree Germany Hedged Equity Index. There are 88 holdings in the pool of fund, with Allianz SE taking the top spot with 6.37%. The fund has AUM of $72.2 million and an expense ratio of 0.48%. The fund gained 2.09% in the past week. It has a Zacks ETF Rank of #2 with a Medium risk outlook.
 
Want key ETF info delivered straight to your inbox?
 
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>



More from Zacks ETF News And Commentary

You May Like