ETF Talk: Investing in Germany, Europe’s Economic Engine

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

It was only in recent weeks that Europe pulled out of its longest recession since World War II (1-1/2 years) due largely to the turnaround in the French and German economies. In particular, the German economy drove the euro higher amid increased German investor confidence. And Germany ended its second quarter with a stronger-than-expected growth rate of 0.7%. Investors who are interested in profiting from the rise may want to consider the iShares MSCI Germany Small-Cap (EWGS).

This non-diversified fund tracks investment results from the MSCI Germany Small Cap Index, and it invests at least 90% of its assets in the underlying index’s securities.

The impressive 17.5% growth that EWGS has had this year reflects Germany’s resurgence. Last year, EWGS also had a strong gain in climbing 14.7%. In addition, the fund features a 1.94% dividend yield. Germany’s economic growth is projected to continue — but at a modest annual pace of 0.5% this year — boosting Chancellor Angela Merkel’s chances of reelection, as she likely will gain credit from voters for the improving economy.


Because EWGS is an exchange-traded fund (ETF) that tracks the fundamentals of the German economy, 29.91% of its assets are invested in industrials. And the remaining supporting sectors are Germany’s financials, 15.47%, and its infrastructure: consumer discretionary, 13.20%; health care, 13.09%; information technology, 12.75%; materials, 10.32%; and telecommunications, 3.72%.

EWGS’s top 10 individually held companies comprise 33.42% of its assets. The fund’s assets are tied to companies in manufacturing, fragrances, engineering, media and technology. Top holdings include: SYMRISE, 4.92%; MTU AERO ENGINES AG, 4.67%; BILFINGER SE, 4.09%; SKY DEUTSCHLAND AG, 3.62%; and WIRECARD, 3.25%.

Germany’s economic growth actually picked up slightly between April and June, with investments in machines and equipment rising for the first time in 1-1/2 years, and that bodes well for the future prospects of EWGS.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me by clicking here. You just may see your question answered in a future ETF Talk.

share on:
share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader

Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor