Germany Investing: What ETF Investors Need To Know

The European stock markets have been on fire in 2017. Equities across the continent have easily outperformed their American counterparts so far this year, and there is hope that this strength can continue heading into next year as well.

However, recent weeks have reintroduced some political risk in a variety of nations in the region. Besides the Catalonian independence vote, the recent German elections were front-and-center was certainly an example of this, while recent elections in Germany arguably didn’t help matters either.

Germany is especially important since it is the powerhouse of the European economy and the driver for the Euro Zone at large. So, what should investors think about some of the recent trends in Europe and how they might impact stocks going forward?

To walk us through this market, we have Wade Guenther, the Global ETF Strategist and Portfolio Manager at Horizons ETFs for this week’s Dutram Report. He guides us through Germany’s recent news, as well as what investors can expect from the nation—and Europe—in the weeks ahead for this podcast.

Germany in Focus

Wade’s firm has a product targeting the German market, the DAX Germany ETF (DAX), so he is a great person to talk to in order to get a handle on what is going on in the European economy these days. We first start off by discussing the political issues that Germany is facing and some of the broader European issues as well.

Wade and I also discuss what sets Germany apart from other European markets and how the country has managed to maintain its exporting prowess when so many other developed markets have struggled. Another key topic, and arguably an important reason for German and European resurgence, is the booming demand from emerging markets. Wade walks us through why Germany is in a perfect position to benefit from these trends, but listen to the podcast for a more thorough explanation of why this might be the case.

What’s the DAX?

Another key topic for our discussion is the Horizons ETF and the benchmark, the DAX.

In case you aren’t familiar, the DAX is more-or-less the Dow Jones Industrial Average of Germany. It also consists of 30 blue chip companies, though that DAX doesn’t utilize price weighting like the Dow and its corresponding ETF, DIA, use.

The top holdings for this benchmark include well-known global companies such as Bayer (BAYRY), Siemens (SIEGY), SAP (SAP), so there are definitely some household names in the group. And beyond these, you know there are plenty of other players in key German industries such as cars and finance, but check out the podcast for additional information regarding the benchmark.

German ETFs

Finally, some investors might be asking why this might be a better choice than other European ETFs that have been out there for a longer-time frame, such as the iShares MSCI Germany Index Fund (EWG). There are some key differences to point out between the two, and you might be surprised to note that DAX is less than half of the cost as its iShares cousin.

We discuss these issues, and more, in today’s podcast, so definitely give it a listen if you want to learn more about German investing heading into 2018!

Bottom Line

But what do you think about the German market? Do you think it is a good buy right now or are broad euro zone ETFs like EZU better choices these days? Make sure to write us in at podcast @ zacks.com or find me on Twitter @EricDutram to give us your thoughts on this, or anything else in the fund market.

But for more news and discussion regarding the world of investing, make sure to be on the lookout for the next edition of the Dutram Report (each and every Thursday!) and check out the many other great Zacks podcasts as well!

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>