As many economies in the Euro zone continue to teeter on the edge of default (or forced bailouts), investors around the globe remain understandably leery of any investments made within the shaky economy. After several years of painstaking measures and efforts made towards stabilizing the region, central bankers are still forced to piece together massive bailout programs and slash interest rates towards record lows. While allocations made to this particular sector of the global economy have diminished in recent years, European equities still maintain their standing as one of the key components and diversifying agents in many investors’ portfolios [see our Euro Free Europe ETFdb Portfolio].
Halfway through the year, 2012 has not proven to be an easier year for the global economy–with Europe taking center stage as the major source of financial turmoil. Many of the funds in the Europe Equities ETFdb Category remain deep in red territory in terms of year-to-date returns, but some are holding up much better than might be expected. Several of these bright spots are perhaps obvious, while other may surprise many investors [see also Europe ETFs: The Good, The Bad, The Ugly].
Below we outline three Europe ETFs that have been holding their ground thus far in 2012:
Market Vectors Germany Small-Cap ETF (GERJ)
Considering Germany’s continued resilience throughout the Euro Zone debt crisis, it perhaps comes to no surprise to find this ETF at the top of the list of the best performing Europe ETFs in 2012. The powerhouse nation has thus far been able to successfully avoid the sovereign debt woes plaguing the cash-strapped region. And as such, Van Eck’s GERJ has also fared well amidst the rocky European environment: currently, the fund is up an impressive 12% year to date. Compared to other Germany-focused products, GERJ offers a new twist on gaining access to the country’s equity market. The fund focuses on the small capitalization segment of German equities, allowing investors to make more of a “pure play” on the local economy, since small businesses tend to better represent the financial health of a given country [see also Global Titans ETFdb Portfolio].
MSCI Belgium Index Fund (EWK)
Like Germany, the non-Euro Zone country of Belgium has also been able to successfully weather the storm. With its strong ties to its resilient neighbor Germany, the nation has even managed to reduce borrowing costs and maintain a healthy level of economic growth. Not surprisingly, the iShares MSCI Belgium Index Fund has outperformed many of its European ETF competitors, cinching a nice 9% gain so far in 2012. A closer look under the hood of EWK reveals yet another reason for the fund’s success: brewing behemoth Anheuser-Busch (AHBIF) makes up nearly 27% of EWK’s total assets. BUD stock is up almost 34% on the year, meaning that a single stock has made a major contribution to the impressive year-to-date returns. Furthermore, EWK’s portfolio is heavily tilted towards consumer staples, a sector that has done considerably well thus far in 2012.
MSCI Ireland Capped Investable Market Index Fund (EIRL)
Ireland is a country that has by no means been immune to the troubles of the Euro Zone debt crisis. In 2010, the country was forced to take a $89.2 billion loan from the European Union and the International Monetary Fund after it was unable to raise funds from the international bonds market. Since then, Ireland has slowly been turning its economy around, reducing its budget deficit and staying on track to meet the targets required by their bailout program. Alongside the country’s struggles over the years, iShares’ EIRL has also had a rocky ride since its inception in 2010. Despite several setbacks, this fund has regained its footing and currently boasts a healthy 7% gain on the year [see also Five ETF Surprises From The First Half].
Follow me on Twitter @DPylypczak
Disclosure: No positions at time of writing.