These iShares MSCI funds offer investors global diversification across two fundamentally different but economically significant markets. They provide exposure to developed economies with distinct economic drivers, sector compositions, and geographic advantages. Together, they create a complementary investment approach that balances industrial strength with a resource-rich economy, potentially enhancing risk-adjusted returns while reducing portfolio volatility through geographic diversification and exposure to different economic cycles.
You get targeted access to large and mid-sized companies in Europe’s largest economy and also abundant natural resources, with significant mining and agricultural exports, particularly to Asian markets.
ISHARES MSCI GERMANY FUND (New York symbol EWG) tracks the stocks in the MSCI Germany Index. Through its holdings, it aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable to foreign investors; that’s partly due to limitations on foreign ownership.
Regardless, this ETF offers investors exposure to Germany’s top stocks: SAP (software) at 16.0%; Siemens (engineering), 9.8% of assets; Allianz (insurance), 8.7%; Deutsche Telekom, 6.8%; Munich Reinsurance, 5.1%; Reinmetall AG (autos and arms), 3.8%; and Deutsche Boerse
(stock exchange), 3.3%.
The fund began trading in 1996. Investors pay a reasonable 0.50% MER.
The German economy saw its growth shrink by 0.2% in the 2024 fourth quarter. Household and government spending increased, but exports were significantly lower. That was the worst performance among G7 countries.
However, the country elected a new government in February 2025. New chancellor Friedrich Merz’s coalition government will now spend roughly $1 trillion U.S. on infrastructure and defence. All that has pushed the iShares MSCI Germany Fund to today’s new all-time highs.
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iShares MSCI ETFs help you capture opportunities across a different geographic area
ISHARES MSCI AUSTRALIA ETF (New York symbol EWA) exposes you to 48 of Australia’s major stocks.
The ETF’s top holdings are Commonwealth Bank of Australia at 15.0% of assets; BHP Group (mining), 10.5%: CSL Ltd. (biotechnology), 6.4%; Westpac Banking, 6.0%; National Australia Bank, 5.9%; Wesfarmers (conglomerate), 4.7%; ANZ Group Holdings (finance), 4.7%; and Macquarie Group (financial services), 3.8%.
By industry, the fund’s holdings break down as Financials, 41.1%; Mining, 17.8%; Health Care, 8.6%; Consumer Discretionary, 7.3%; Industrials, 6.1%; Real Estate, 5.8%; Consumer Staples, 4.0%; Energy, 3.1%; Telecoms, 2.3%; Information Technology, 2.1%; and Utilities, 1.6%.
The iShares MSCI Australia ETF started up March 12, 1996, and investors pay a reasonable 0.50% MER.
The Australian economy remains steady, amid continued international demand for minerals and a recovering tourism market.
The overall outlook for 2025 is positive, with the economy forecast to grow 2.1%. The main threats are still-high inflation, which is hurting consumer spending, as well as sluggish global growth and high interest rates.
Meantime, though, still-solid global demand for commodities will boost exports. That should help to offset risks such as the ongoing tension between the U.S. and China, as well as a shortage of skilled workers and rising labour costs in the service industry.
Recommendation in Canadian Wealth Advisor: iShares MSCI Germany Fund & Australia ETF are buys.
