Emerald Isle Mints Green For Investors

Exchange-traded funds providing exposure to European equities have been getting plenty of attention this year. National elections earlier this year in the Netherlands and France, and in Germany in a few days, were among the events turning investors' attention across the Atlantic.

Italy's efforts at banking reform and political volatility there coupled with Greece's ongoing austerity efforts and Catalonia's independence vote in Spain are other events putting Europe stocks and ETFs in the spotlight. All the while, things have been fairly quiet in Ireland.

Markets like quiet. Up nearly 22 percent year to date, the iShares MSCI Ireland Capped ETF EIRL confirms as much. EIRL, the only ETF dedicated to Irish equities, hit a record high Thursday.

Impressive Economic Growth

Ireland's steady economic growth is serving as the foundation for EIRL's impressive year-to-date performance.

“The Irish economy grew by 1.4 percent in the second quarter of 2017, rebounding from a 2.6 percent contraction in the previous quarter,” reported The Irish Times. “Despite the volatility from quarter to quarter, the latest national accounts show the Irish economy is growing at a healthy 5.8 percent in annual terms.”

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Ireland's equity market is small compared to what investors find in the U.K. or major eurozone economies, such as Germany and France. EIRL reflects that diminutive stature, holding just 25 stocks. The ETF's top two holdings combine for over 37 percent of its weight.

More Good News

Additional data points indicate the Irish economy is on firm footing, which could be a sign of more upside to come for EIRL.

“Abstracting from the forces that have distorted the national accounts, the Irish economy seems to be doing reasonably well,” according to Capital Economics. “The upshot is that we continue to expect Ireland's economy to grow fairly quickly.” 

EIRL allocates over half its combined weight to the materials and consumer staples sectors. Industrial and consumer discretionary names combine for over 26 percent. The ETF has a three-year standard deviation of 15.1 percent.

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