Netherlands Vs. Spain: ETF Style

by on July 10, 2010 | ETFs Mentioned:

The 2010 FIFA World Cup final will take place this Sunday with the match being between Netherlands and Spain. In light of this major sporting event, we compare and contrast the two ETFs tracking the respective countries to see who would win a match on the financial pitch.

iShares MSCI Netherlands Index Fund (EWN)

This ETF tracks the MSCI Netherlands Investable Market Index, which measures the performance of the Dutch equity market. The fund holds a total of 57 securities in total with well-known brewer Heineken finding its way into the top ten holdings. EWN maintains a healthy diversity in its sector breakdown with no single area receiving more than a 24% weighting. Though this ETF allocates to companies of all sizes, its main focus lies in giant and large market capitalization firms. EWN has posted gains of 24% in the last 52 weeks but it is down nearly 10% on the year but pays out a healthy dividend of 3.3% while charging investors 0.52% (see all of EWN’s fundamentals here).

iShares MSCI Spain Index Fund (EWP)

EWP seeks to replicate the MSCI Spain Index, which measures the performance of the Spanish equity market. This ETF’s 31 securities are allocated primarily to the financials (43.3%), telecom (18.4%), and industrial materials (13.3%) sectors. The fund keeps the majority of its investments in giant sized firms, but it does delve into large, medium, and micro market capitalization companies (see all of EWP’s holdings here). EWP is down over 22% on the year, which should come as no surprise to most since Spain has been hit very hard by the sovereign debt crisis that is still plaguing Europe [see more at Hardest Hit Europe ETFs From The First Half Of 2010]. Even with its disappointing performance this year, the fund pays out a dividend of 4.4% but charges investors a fee of 0.52%.

Who Takes Home The ETF Cup?

Though Paul the prophetic octopus has chosen Spain to win the football World Cup, Netherlands would win our ETF Cup. For starters, Netherlands is not under nearly as much financial scrutiny as Spain. The Spanish ETF will have a hard time recovering since Spain has such high levels of unemployment which are now approaching 20%, among the highest in the developed world. EWN has outperformed EWP, though they both realized negative returns thanks to investor fears over the general health of the euro zone. While the Spanish ETF may have a higher dividend yield, this cannot outweigh the problems that the Spanish nation must face to return to prosperity. The Netherlands ETF also has a major advantage in its sector diversity while EWP has a heavy focus on financials, the exact sector that is under fire overseas. Though it will be a good match, the Netherlands ETF will come out on top in today’s market [also see the World Cup of ETFs].

For more ETF ideas make sure to sign up for our free ETF newsletter.

Disclosure: No positions at time of writing.