Should You Buy the Dip in This Germany ETF?

Since its reunification in 1990, Germany has established itself as the economic powerhouse in the centre of Europe. However, its dominant economic role has been cast into question due to its recent performance. In the second quarter of 2023, the German economy reported that adjusted GDP contracted by 0.2%. This means that the economy has contracted for three straight quarters, after a 0.4% retreat in Q4 2022 and a 0.1% decline in Q1 2023.

Germany is expected to post yet another GDP decline in the third quarter. However, the country is projected to return to GDP growth in the final quarter of 2023. Should you look to buy the dip in a Germany focused exchange-traded fund (ETF)? Let’s jump in.

The iShares MSCI Germany ETF (NYSE:EWG) is a BlackRock fund that seeks to track the investment results of an index composed of German equities. Shares of this ETF have dropped 5.8% month-over-month as of close on Monday, August 28. However, the ETF is still up 9.8% so far in 2023. Its shares have shot up 26% in the year-over-year period.

Some of the top holdings in this fund include SAP, the Walldorf-based multinational software company that develops enterprise software to manage business operations and customer relations. Other top holdings include companies like Siemens, Mercedes-Benz, and Allianz. This fund demands a relatively standard management fee of 0.50%.

Investors should not bet against the German economy for the long term. The country still boasts a remarkable stable of world class products and services that have strong demand all around the world. I’m happy to buy-the-dip in this ETF in late August 2023.