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CHICAGO, June 13, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: iShares MSCI Mexico ETF (AMEX:EWW-Free Report), iShares MSCI Switzerland ETF (AMEX:EWL-Free Report), iShares MSCI United Kingdom ETF (AMEX:EWU-Free Report) and iShares MSCI Germany ETF (AMEX:EWG-Free Report).
Who Wins the World Cup of ETFs?
The 2014 World Cup is starting in Brazil with the host nation taking on Croatia. The tournament will take place over the next month with the champion being crowned on July 13th in Rio de Janeiro.
While this is obviously a big, global event, personally, I am not much of soccer (or football if you prefer) fan. But, I am a huge fan of ETFs, and especially the many country funds that have taken over the market.
And thanks to the proliferation of ETFs in the past few years, there are now country ETFs for a wide variety of nations out there allowing us to have a 'World Cup of ETFs' featuring the funds for each nation (read Can FIFA World Cup Give Brazil ETFs a Kick?).
For the eight country ETFs that get to this point, six months performance was used to decide the winners of the remaining matchups:
Mexico vs. Japan: This was a close battle as both of these markets struggled to start the year but have made some serious headway as of late. In the end though, Mexico is the winner thanks to its flat performance over the past six months compared to EWJ's 1.2% loss in the same time frame (see 3 Incredible ETF Buys for Under $20).
Switzerland vs. USA: Both of these economies have been very strong, but Switzerland has found a niche in the middle of Europe. That has allowed EWL to beat out SPY in the past six months (10.25% to 8.9%), pushing the European nation ahead of the USA and into the semifinals.
Netherlands vs. England: The Netherlands and EWU (our proxy for England) were neck-and-neck for the first part of the trailing six month period. However, EWU pulled away and ended up well in front of the Netherlands and EWN to win 8.8% to 5.4%.
Nigeria vs. Germany: In a three month performance comparison, NGE would have easily beaten out the Germans. However, with a longer six month look EWG and Germany are able to advance thanks to a 6.2% performance for Germany and a 5% gain for NGE.
For the final four, we decided to look at the trailing one year performance to see who has the most momentum heading into the World Cup of ETFs. In the matchups, we have Mexico and Switzerland on one side, and England vs. Germany on the other.
For this matchup, investors have EWW representing Mexico, and EWL representing Switzerland. Let's take a closer look at these ETFs before we see the results:
EWW - One of the most popular Latin America ETFs out there, this fund sees about three million shares in volume on an average day, on AUM approaching $3 billion. Consumer staples, materials, and financials take the top three spots, while the biggest components here are America Movil, Fomento Economico Mexicano, and Grupo Financiero Banorte.
EWL - The Swiss ETF is often overlooked in favor of its bigger regional rivals, but this fund is still relatively popular with just over $1.1 billion in assets and average daily volume approaching 350,000 shares. Health care, consumer staples and financials dominate this fund, while the mega caps of Nestle, Roche and Novartis take the top three spots.
Trailing one year performance comparison: EWL up 19.45%, EWW up 4.41%, Switzerland ETF wins. The run for Mexico comes to an end while Switzerland advances on to the finals to take on the winner of the Germany vs. England matchup (see all the European Equity ETFs here).
For this matchup, investors have EWU representing England (and the UK), and EWG representing Germany. Let's take a closer look at these ETFs before we see the results:
EWU - The British ETF is also a very popular fund, as it does about 2.8 million shares of volume a day while it has over $4.3 billion in assets. Financials are the biggest component, trailed by energy and consumer staples. For the top components, HSBC Holdings is number one, followed by BP and Royal Dutch Shell.
EWG - One of the most popular country funds in the ETF world, EWG sees volume exceed three million shares on an average day while assets come in at the $6 billion mark. Consumer discretionary, financials, and basic materials take the top three spots in this well-rounded fund, while the three biggest components include Bayer, BASF, and Siemens.
Trailing one year performance comparison: EWU up 19.05%, EWG up 21.94%, Germany ETF wins. Germany beats out its European rival by a slim margin to advance on to the finals. The country will take on its neighbor Switzerland for the championship.
Third Place Game and World Cup Championship
For the third place game and the championship, we are looking to see which ETF has performed the best since the last World Cup ended in 2010 on July 11th. Whichever national ETFs had the better performance will be crowned the winners in their respective matches:
Third Place Game: In the third place battle, Mexico had a strong long term performance, but the recent volatility was too much to overcome. EWU finished ahead of EWW to capture third place thanks to its roughly 50% price gain since the end of the last World Cup.
For the championship: We have the Swiss taking on the Germans. While both of these European ETFs have outperformed their counterparts in the third place game, there was a clear winner since the end of the last World Cup; Switzerland. The fund gained nearly 70% since the last World Cup started, compared to a roughly 60% for the German ETF (see Switzerland ETF: Safest Play in Europe?).
So based on our ranking system and recent performance, it looks like the iShares MSCI Switzerland ETF (EWL) takes the 2014 World Cup of ETFs. While this probably won't be the same result as what we see down in Brazil, hopefully this fun exercise has shown how many country ETFs there really are out there and how far the ETF industry has come in terms of its offerings.
Additionally, the process that I used to get down to the winners should highlight that many country ETFs have been performing strongly lately and could be poised for more gains in the future as well. So make sure to check out our ETF ranking system or sign up for our free fund newsletter for more information on the wide world of ETFs, no matter who you are rooting for in the real World Cup.
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