The top five investments in this German fund are Bayer AG (BAYZF.DE, 7.97% of assets); Siemens AG (SMAWF.DE, 7.63%); SAP SE (SAPGF.DE, 7.62%); Allianz SE (ALIZF.DE, 7.26%) and Basf SE (BFFAF.DE, 6.92%).
iShares MSCI Germany ETF (EWG)
From Internet Wealth Builder
iShares MSCI Germany ETF (EWG) tracks the performance of a portfolio of large and mid-size German companies.
The fund has been around over two decades, dating back to 1996. Results were poor in 2014 and 2015, with the fund recording losses in both years as Europe struggled with a series of crises. Last year was slightly better, with a modest gain of 2.06%. But the fund has really taken off in 2017 with a year-to-date return of 25.7% as of the close of trading on Oct. 18. Over the last five years, it has provided a total return of 8.5% per annum, compounded, compared to 8.1% for XIU, the S&P/TSX 60 ETF. The average annual compound rate of return since inception is 6.6%.
The fund holds 59 positions. About 18% of the assets are in consumer discretionary stocks, primarily automakers such as Daimler, BMW, and VW. Another 14% is in materials such as chemical makers BASF and Linde, and 14% in industrials like Siemens. Almost half its assets provide exposure to major export sectors.
Add in health care (13.5%) with Bayer, Fresenius, and Merck Kga, 10% in technology (SAP and Infineon), as well as Adidas (3%), and the ETF represents those sectors that benefit from global demand for top quality manufactured products. Most of its financial weight (10% of 15%) is global insurers Allianz and Munich Re, meaning there’s not too much exposure to continental banks’ large holdings of Eurozone government debt.
The fund has assets under management of almost $4.7 billion (figures in U.S. dollars). The portfolio p/e ratio is 17.24. It has a reasonable expense ratio of 0.48%.
Payments are distributed twice a year, in June and December. The fund paid $1.19 in dividends over the last 12 months.
Buy for continued growth in German manufacturing and exports, helped by a relatively weak euro.
Gavin Graham in Gordon Pape’s Internet Wealth Builder, www.buildingwealth.ca, 1-888-287-8229, October 23, 2017