Spain ETF Rewards Risk Takers

ETF Trends

Investors are enjoying the resurgence of several previously moribund Eurozone economies and equity markets, including Spain, the region’s fourth-largest economy.

Year-to-date, the iShares MSCI Spain Capped ETF (EWP) is higher by 10%, a performance that easily tops those offered by steadier single-country Europe ETFs, such as the iShares MSCI United Kingdom ETF (EWU) , the iShares MSCI Germany ETF (EWG) , as well as diversified Europe funds. EWP is also the second-best of the five single-country ETFs tracking PIIGS nations behind the iShares MSCI Italy Capped ETF (EWI) . [PIIGS ETFs Rally, Gain Assets[

Amid soaring confidence that Prime Minister Mariano Rajoy will get the Spanish economy on firmer footing, investors are pouring cash into EWP. The ETF hauled in $238 million in the period ending April, more than any other country-specific ETF, reports Alexis Xydias for Bloomberg.

EWP had $1.88 billion in assets under management as of April 15, according to BlackRock data. Investors have added $952 million in the fund, putting it on track for its best year ever, according to Bloomberg.

EWP is by far the largest PIIGS ETF with nearly $600 million more in assets than EWI. The lone Spain ETF is also larger than the comparable Austria, France, Ireland and Netherlands ETFs combined. [More Reasons to Like the Spain ETF]

EWP and Spanish stocks share something in common with their French counterparts and the iShares MSCI France ETF (EWQ) : The potential for added upside despite substantial gains over the past two years. [Upside Ahead for the France ETF]

Like France’s CAC 40, Spain’s benchmark IBEX 35 Index is well below its all-time highs. In fact, with Wednesday’s close just under 10,268, the IBEX 35 is still nearly 1,000 points below its 2009 highs. The IBEX 35 would need to surge almost 45% to reach the all-time highs set in October 2007. That is when EWP flirted with $68. The ETF closed at $41.20 Wednesday.

On valuation, Spanish stocks are not expensive compared to U.S., U.K. and German equivalents and are also less expensive than stocks in Ireland and Greece.

iShares MSCI Spain Capped ETF

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