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Matchups to 2015 Rugby World Cup for ETF Fans

The 2015 Rugby World Cup tournament kicks off today at Twickenham and the sports frenzy is back. Host England will see matches across the country and at the Millennium Stadium in Cardiff till the William Webb Ellis Cup is lifted on October 31.

This is the eighth Rugby World Cup and has been proclaimed as the “biggest and the best” by tournament chief Stephen Brown. Demand for men's rugby union tournament is incredible this time with record ticket sales. According to the organizers, 2015 Rugby World Cup surpassed 2.25 million tickets bought for the 2007 Rugby in France, four days before the event kicks off. As a result, the World Cup is expected to infuse one billion pounds to the England economy (read: What Makes This New UK ETF Different from Others?).

Thanks to the rugby fever, many investors are interested in betting on the stocks of those countries that could mint money from this six-week event. And the proliferation of ETFs makes this possible as there is now a huge number of country ETFs, which could help us to find out the one that would emerge as a winner during the 2015 Rugby World Cup event.

How to Pick ETFs?

Considering the love for the game, we have broken down the nations into their respective World Cup groups and highlighted the most popular ETF tracking each nation. Much like the real contest, two nations from each group or pool will advance to the next round.

Fortunately, all the groups have at least two nations that have funds with a Zacks ETF Rank, making the play-offs easier. If there is a tie among ranks, we will consider the three-month performance in selecting the ETF qualifying for the next round.

Pool A

Winner: England (EWU) – Zacks ETF Rank #2 (Buy)
Runner Up: Australia (EWA) – Zacks ETF Rank #3 (Hold)
Wales: No ETF tracking this nation
Fiji: No ETF tracking this nation
Uruguay: No ETF tracking this nation

Here, we have used British ETF (EWU) as a proxy for England. This is an easy group with EWU and EWA as the only representatives. Australia has a Zacks Rank #3, trailing the Buy-rated England.

Pool B

Winner: Japan (EWJ) – Zacks ETF Rank #2
Runner Up: U.S. (SPY) – Zacks ETF Rank #3
Third Place: South Africa (EZA) - Zacks ETF Rank #4 (Sell)
Samoa: No ETF tracking this nation
Scotland: No ETF tracking this nation

This is another easy group for ETFs as the countries easily advance according to their Zacks Ranks.

Pool C

Winner: New Zealand (ENZL) – Zacks ETF Rank #3
Runner Up: Argentina (ARGT) – Zacks ETF Rank #5 (Strong Sell)
Tonga: No ETF tracking this nation
Georgia: No ETF tracking this nation
Namibia: No ETF tracking this nation

In this group, there are only two representatives, New Zealand with a Zacks Rank #3 and Argentina with a Zacks Rank #5. So, ENZL advances to the top position.   

Pool D

Winner: Ireland (EIRL) – Zacks ETF Rank #2
Runner Up: Italy (EWI) – Zacks ETF Rank #2
Third Place: France (EWQ) – Zacks ETF Rank #3
Fourth Place: Canada (EWC) – Zacks ETF Rank #3
Romania: No ETF tracking this nation

This group looks a little complicated as two country ETFs have a Zacks Rank #2 while the other two have a Zacks Rank #3. So there is a tie among them. For the top two positions, Ireland beat Italy over the past three months by nearly 400 bps. In the next spots, France edged out Canada in terms of the trailing three-month performance, losing nearly 2.7% compared with a loss of 11.9% for EWC (read: Should You Buy Canada ETFs on the Cheap?).

Knock-out Stage

The winner and runner-up of each pool will now move on to the knockout stage, which consists of quarterfinals, semifinals and then the finals.

Quarterfinals

In the quarterfinals, the six-month performance was used to decide the winners of the remaining matchups that take the tournament to the semifinals. Here, the winner of each pool will play with the runner-up of a different pool following numerically. For example, England will play with the U.S.; Japan will face Australia and so on.

England vs. U.S.: Competition is tough between the two, though England beat the U.S. by a narrow margin of just 10 bps in terms of performance over the past six months (read: UK ETFs in Focus as BOE Keeps Rate Unchanged).

Japan vs. Australia: While both funds trended downward over the past six months, Japan advances to the semifinals with a loss of 4.6% versus a loss of 16.2% for the Australia ETF.

New Zealand vs. Italy: Here, EWI is the undoubted winner with gains of 6.7% over the past six months compared to the loss of 17.9% for ENZL.

Ireland vs. Argentina: Ireland is the winner as EIRL gained 13% over the past six months compared with the 13.9% loss for ARGT.

Semifinals

For the final four, we look at the trailing one-year performance to see which has the maximum momentum heading into the Rugby World Cup of ETFs. In the matchups, we have England and Japan on one side and Italy versus Ireland on the other. There is one notable factor in all the four ETFs — all of them charge a similar expense ratio of 0.48% from investors.

iShares MSCI UK Index Fund (EWU) vs. iShares MSCI Japan ETF (EWJ)

For this ETF faceoff, England is represented by EWU and EWJ is a Japanese player. Below we take a closer look at these funds before deciding on the winner:

EWU: This is among the popular and highly traded European ETFs with AUM of $2.7 billion and average daily volume of around 3.2 million shares. The fund holds 112 securities in its basket with heavy concentration on the top the top firm – HSBC Holdings – at 7.1% while other firms hold less than 5.5%. From a sector look, about one-fourth of the portfolio is dominated by financials, while consumer staples, energy and consumer discretionary round off the next three. The fund lost about 11% over the trailing one-year period.

EWJ: This fund is the most popular and liquid ETF tracking the Japanese economy with AUM of $18.7 billion and average daily volume of more than 37.5 million shares. Holding 313 securities in its basket, it is slightly skewed toward the top firm – Toyota Motor – at 6% while other firms do not account for more than 2.94% of assets. However, the product is widely spread across consumer discretionary, financials, industrials and information technology that make up for double-digit exposure each in the basket. EWJ was on an uphill journey since the start of the year but has pulled back in recent months, having gained 2.3% over the past twelve months.

Winner: The Japan ETF wins and advances to the final round to take on the winner of the Italy vs. Ireland matchup (read: China Stimulus Raises Hopes: Japan ETFs to Lead).

iShares MSCI Italy Capped ETF (EWI) vs. iShares MSCI Ireland Capped ETF (EIRL)

For this faceoff, EWI represents Italy and Ireland is represented by EIRL. Let’s take a closer look at these funds before deciding on the winner:

EWI: The Italy ETF is often overlooked in favor of its bigger regional rivals but this fund is still relatively popular with nearly $1.2 billion in assets and average daily volume of 2.4 million shares. In total, it holds 26 stocks in its basket, which are heavily concentrated on the top two firms – Intesa Sanpaolo and Eni – with a combined 25.5% share. Other securities hold less than 9% of total assets. Further, about 40% of the fund’s portfolio is allotted to financials from a sector look while utilities, energy, industrials and consumer discretionary round off the top five with double-digit exposure each. The fund has shed 4.3% over the trailing one-year period.

EIRL: The fund provides exposure to a small basket of 24 Irish stocks with heavy concentration on the top three holdings – CRH Plc, Kerry Group and Bank of Ireland. These three combine to make up for nearly 44% share while the other firms hold less than 5.5% of assets. From a sector look, materials takes the top spot at 26.3%, closely followed by consumer staples (23.8%), financials (17.8%) and industrials (17.4%). The ETF has amassed about $163.9 million in its asset base and sees a pretty low volume of around 48,000 shares a day. It has delivered strong returns of 22.2% over the past one-year period.

Winner: The Ireland ETF wins and will again matchup with the Japan ETF for the championship (read: 6 Exceptional ETFs Up Over 15% YTD).

Bronze Final (Third Place Game) and the Final

For the bronze final and the final, we will take a look at which ETF has been a better performer since the last Rugby World Cup which ended on October 23, 2011 in New Zealand. The national ETFs with superior performance will be crowned the winner in their respective matches:

Bronze Final: Losers of the semi-final, i.e. England and Italy, will play for the third place. Italy gives a tough competition to EWU and finishes ahead when looking at its long-term performance. EWI and captures the third place on a 21.5% price gain since the end of the last Rugby World Cup versus a gain of about 20.7% for EWU.
 
The Final:
We have Ireland beating Japan to take the championship. EIRL is a clear winner since the end of the last Rugby World Cup, having gained 129.1% compared with 30.5% for the Japan ETF.

Result

Based on our ranking system and performances, it looks like iShares MSCI Ireland Capped ETF (EIRL) will lift the William Webb Ellis Cup (for ETFs) this year. While the result might differ from the real Rugby tournament, the sport’s passion and excitement, hopefully, will drive many investors to the ETF investing world.

Also, the process that has been used to decide on the winner suggests that many country ETFs have performed strongly and could be poised for more gains in the future. 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 which team you are rooting for this Rugby World Cup.

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ISHARS-UTD KING (EWU): ETF Research Reports
 
ISHARS-AUSTRAL (EWA): ETF Research Reports
 
ISHARS-JAPAN (EWJ): ETF Research Reports
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
ISHARS-S AFRICA (EZA): ETF Research Reports
 
ISHARS-MSCI NZ (ENZL): ETF Research Reports
 
GLBL-X MS ARGEN (ARGT): ETF Research Reports
 
ISHARS-MS IRLND (EIRL): ETF Research Reports
 
ISHARS-ITALY (EWI): ETF Research Reports
 
ISHARS-CANADA (EWC): ETF Research Reports
 
ISHARS-FRANCE (EWQ): ETF Research Reports
 
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