Market Overview

Germany ETFs Follow The Breakout


The German stock market is on an absolute tear in 2015. Germany's stock index known as the DAX, which is equivalent to the Dow Jones Industrial Average or S&P 500 Index, broke above 12,000 this week for the first time ever.

The index is made up of 30 blue-chip stocks, only three of which are down on the year. After poking its head above 10,000 in mid-January, it hasn't looked back and continues to set records on nearly a daily basis. The index is up 22 percent in 2015 and up 32 percent year over year.

Specific Growth Elements

The largest growth has come from the German auto industry, with three of the top four performing companies in the DAX being automakers so far this year.

Companies such as Volkswagen AG (ADR) (OTC: VLKAY), Bayerische Motoren Werk AG (BMW) (Bayerische Motoren W (OTC: BAMXY) and Bayerische Moterenwe (OTC: BAMXF) and Daimler AG (manufacturer of Mercedes-Benz) (OTC: DDAIF)(OTC: DDAIY) vastly outperforming their American counterparts General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F).

Related Link: Germany Leads The Way In Eurozone Recovery

The incredible growth in German equities is due to a combination of the massive quantitative easing program that the European Central Bank has put into effect and the weak euro providing extra cash flow for Germany's largest exporters. European companies that have a large amount of sales in the U.S., such as automakers, earn more money when they convert their sales from U.S. dollars into euros.

Highlighted below are three Germany ETFs that have been affected by the solid performance of their equity markets.

iShares MSCI Germany ETF

The iShares MSCI Germany Index Fund (ETF) (NYSE: EWG) provides investors exposure to 54 large- and mid-sized companies in Germany across ten sectors, with consumer discretionary at 22.5 percent and financials at 17 percent being the most heavily weighted sectors.

The top individual holdings include:

  • Bayer AG (ADR) (OTC: BAYRY) at 10.2 percent
  • Daimler AG coming in at 7.8 percent
  • BASF SE (ADR) (OTC: BASFY) totaling 7.2 percent

The ETF is down 2 percent over the last 12 months and up 3 percent over the last six months. EWG has an expense ratio of 0.49 percent.

Related Link: Euro/US Dollar Higher

iShares MSCI Germany Small-Cap ETF

The iShares MSCI Germany Small Cap ETF could be considered EWG's little brother and is composed of 104 small cap German companies across nine sectors, exchanging on the BATS (BATS: EWGS). The industrials make up 35 percent and information technology come in at 16 percent.

The top individual holdings include:

  • Wirecard AG (OTC: WRCDF) at 4.9 percent
  • MTU Aero Engines AG (OTC: MTUAY) with a 4.9 percent holding
  • Leg Immobilien AG (OTC: LEGIF) coming in at 4 percent

The ETF is down 6 percent over the last 12 months, up 5 percent over the last six months and up 6 percent in 2015. EWGS has an expense ratio of 0.59 percent.

Deutsche X-Trackers MSCI Germany Equity ETF

The DBX ETF Trust (NYSE: DBGR) aims to provide investors with exposure to German equity markets, while mitigating exposure to fluctuations between the U.S. dollar and the euro. The ETF is made up of 55 German companies across 10 sectors with consumer discretionary at 23 percent and financials at 17 percent.

The top holdings include:

  • Bayer AG at 10.2 percent
  • Daimler AG making up 7.8 percent
  • BASF AG totaling 7.2 percent

DBGR is up 18 percent over the last 12 months, up 15 percent over the last 6 months and up 23 percent in 2015. DBGR has an expense ratio of 0.45 percent.

Posted-In: ecb euro GermanySector ETFs Eurozone Markets Trading Ideas ETFs


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