Equity: Germany - Total Market

FGM Top Performer Intra-day
Price $50.33
Today’s Change +1.05%(2.12)
12:30pm 11/24/2017
GRMY Bottom Performer Intra-day
Price $24.14
Today’s Change 0.00%(0.00)
1:10pm 11/24/2017
  • Overview
  • Efficiency
  • Tradability
  • Fit

ETF.com Insight

In an interesting twist, there are as many currency-hedged Germany ETFs as unhedged ones. Euro weakness against the dollar explains the appeal of the currency-hedged ETFs, which removethere are as many currency-hedged Germany ETFs as unhedged direct euro exposure and leave investors solely with equity exposure.
EWG is the segment powerhouse: It provides comprehensive, neutral exposure to the German market, and is easily our Analyst Pick for the segment. It excludes small-caps, but still captures the space well overall. EWG dominates with billions in AUM while the others struggle to accumulate even a fraction as much.
DBGR, DXGE and HEWG also provide comprehensive exposure to German equities but hedge currency exposure. DBGR and HEWG follow a straight cap-weighted strategy, while DXGE strips out companies getting more than 80% of revenues domestically, and weights its constituents by dividends. FGM employs a quasi-active model to pick potential outperformers. Meanwhile, QDEU equally weights three factor indices: one each for low volatility, quality, and value.
None of the funds veer far from the neutral market except for FGM. EWG, HEWG and DBGR weight the biggest German companies heavily: Bayer, Siemens, and Daimler together make up about 1/4 of each portfolio. DXGE's dividend weighting strategy still heavily favors large-caps. In contrast, FGM uses a tiered equal-weighting scheme that de-emphasizes the biggest firms. QDEU makes a few different selections but otherwise doesn't look radically different from our benchmark.
Cost-conscious investors should avoid FGM: its steep fee and wide spreads make it expensive for traders and long-term investors alike. EWG and HEWG are the only funds liquid enough to suit traders' needs, although DXGE, DBGR and HEWG see reasonable spreads, which can be managed with limit orders. QDEU's low fee might appeal to long-term investors, but it won't be easy to trade. (Insight updated 11/22/17)

All Funds (8)

EWG $4.74 B 4741026570 big, cheap, & vanilla

A 96
E
92
92
T
89
89
F
96
96

QDEU $19.36 M 19364700 weak trader, high closure risk

B 92
E
89
89
T
60
60
F
92
92

DXGE $110.39 M 110389995 FX-hedged exporters

B 44
E
86
86
T
68
68
F
44
44

GRMY $2.41 M 2408024.08 follows the same index as HEWI

C 61
E
76
76
T
59
59
F
61
61

DBGR $51.2 M 51203947.2 FX-hedged

C 47
E
84
84
T
67
67
F
47
47

FGM $234.85 M 234845281.85216 pricey quant model

D 66
E
67
67
T
60
60
F
66
66

HEWG $679.3 M 679295040 FX-hedged EWG

D 46
E
61
61
T
74
74
F
46
46

FLGR $2.5 M 2501000 N/A

N/A 0
E
0
-1
T
0
-1
F
0
-1

ETF.com Grade as 11/16/17

Equity: Germany - Total Market

Performance  [as of 11/21/17] 1 Month 3 Month YTD 1 Year 3 Years 5 Years 10 Years
Benchmark: MSCI Germany Investable Markets0.52%7.50%28.15%37.16%9.23%11.06%--
A 95.891463EWG4741026570EWGiShares MSCI Germany ETF1.26%8.19%27.20%34.67%7.88%10.17%2.18%
B 92.009084QDEU19364700QDEUSPDR MSCI Germany StrategicFactors ETF2.02%8.04%28.87%36.00%8.67%----
B 43.663626DXGE110389995DXGEWisdomTree Germany Hedged Equity Fund1.78%9.18%17.05%25.13%12.04%----
C 60.805781GRMY2408024.08GRMYXtrackers Germany Equity ETF0.79%2.86%--34.74%------
C 47.439156DBGR51203947.2DBGRXtrackers MSCI Germany Hedged Equity ETF1.84%9.53%15.92%23.93%10.42%10.64%--
D 65.581726FGM234845281.85216FGMFirst Trust Germany AlphaDEX Fund3.38%9.73%39.71%46.60%12.72%12.59%--
D 45.920801HEWG679295040HEWGiShares Currency Hedged MSCI Germany ETF1.67%9.17%15.67%23.72%10.30%----
N/A 0FLGR2501000FLGRFranklin FTSE Germany ETF--------------
All returns over 1 year are annualized. All returns are total returns unless otherwise stated.

ETF.com Efficiency Insight

With the exception of a couple outliers, most funds in the segment charge within a few bps of each other. However, index tracking differences and the effects of securities lending mean thatnot all funds are equally costly to hold not all funds are equally costly to hold.
iShares' EWG and WisdomTree's DXGE have tracked their indexes consistently and closely, with securities lending income partly offsetting their fees. Deutsche's DBGR has also tracked closely most of the time, but not always—it's been more variable than we'd like.
HEWG is a special case. Our tracking stats compare the fund's performance to its index, but HEWG gets its equity exposure by holding EWG, which continues to trade long after the German market has closed each day. As a result, HEWG's hugely variable tracking stats actually reflect price discovery by EWG after the close. However, HEWG's median tracking difference is probably not too far off from actual long-term holding costs, and isn't very impressive.
First Trust's FGM charges a large premium over peer funds for its "smart beta" AlphaDEX methodology. Realized costs have been all over the place, likely due to slippage resulting from portfolio turnover during the fund's semi-annual reconstitutions. SSgA's QDEU also follows a "smart beta" index, but charges far less than peers. We'll have complete tracking stats for the fund in mid-2016.
QDEU is a newer fund that hasn't attracted much interest—we see elevated closure risk. All other segment funds have significant asset bases and won't likely be shutting down any time soon. EWG in particular has proven itself over the past two decades and consequently the fund has accumulated billions in assets.
All funds have been tax efficient in recent years by avoiding capital gains payouts. (Insight updated 11/22/17)

All Funds (8)

92
92.006082
89
88.699284
86
86.482477
84
83.889745
76
75.697205
67
67.083602
61
60.531033
N/A
0

ETF.com Grade as 11/16/17

Equity: Germany - Total Market

Tracking Difference (12 Month)

Ticker Expense Ratio Median Max. Upside Max. Downside Max LT/ST Cap Gains Rate Rule Legal Structure Fund Closure Risk Efficiency
DBGR Xtrackers MSCI Germany Hedged Equity ETF 0.45% -0.53% -0.22% -0.67% 20.00% / 39.60% Medium 83.889745
DXGE WisdomTree Germany Hedged Equity Fund 0.48% -0.37% -0.14% -0.59% 20.00% / 39.60% Low 86.482477
EWG iShares MSCI Germany ETF 0.48% -0.23% -0.14% -0.27% 20.00% / 39.60% Low 92.006082
FGM First Trust Germany AlphaDEX Fund 0.80% 0.34% 2.13% -3.31% 20.00% / 39.60% Low 67.083602
HEWG iShares Currency Hedged MSCI Germany ETF 0.53% -0.30% 2.48% -2.44% 20.00% / 39.60% Low 60.531033
QDEU SPDR MSCI Germany StrategicFactors ETF 0.30% 0.03% 0.06% 0.00% 20.00% / 39.60% High 88.699284
GRMY Xtrackers Germany Equity ETF 0.15% -- -- -- 20.00% / 39.60% High 75.697205
FLGR Franklin FTSE Germany ETF 0.09% -- -- -- 20.00% / 39.60% Low 0

ETF.com Tradability Insight

EWG, and its currency-hedged variant HEWG, are the only real choices for traders in this segment. Both funds trade tens of millions of dollars every day at penny-wide spreads. HEWG tradesEWG and HEWG are trader's only reach choices as well as it does in part because it holds EWG for its underlying equity exposure. Other funds in the segment trade well too, but won't suffice for those demanding maximum liquidity.
In particular, most investors will do well trading DXGE or DBGR, which trade all day at very reasonable spreads. FGM is also reasonably liquid, though a less-liquid underlying basket means that premiums and discounts are more likely, so check iNAV and place careful limit orders.
QDEU is the only fund in the segment that sees real liquidity problems. Just a few hundred shares change hands most days, and while quoted spreads are usually reasonable, the fund's shallow order book means that careless market orders can easily spike trading costs upward. Proceed with caution.
In general, large traders should be able to get better execution by using a liquidity provider. Trading in the morning may help assure best execution as well, as the German equity market closes early in the US trading day (although creations in HEWG are done using EWG, which trades during US market hours). Again, beware of weaker underlying liquidity in FGM. (Insight updated 11/22/17)

All Funds (8)

89
89.037033
74
74.331602
68
68.242812
67
66.614711
60
60.048908
60
59.711979
59
58.575589
N/A
0

ETF.com Grade as 11/16/17

Equity: Germany - Total Market

Ticker Median Daily Volume ($) Average Spread Creation Unit/Day Market Hours Overlap Underlying Volume/Unit % Creation Cost Per Unit (%) Impediment to Creations Score - Tradability
DBGR Xtrackers MSCI Germany Hedged Equity ETF $257.82 K 0.11% 0.17 31.00% 0.01% 0.05% None 66.614711
DXGE WisdomTree Germany Hedged Equity Fund $350.01 K 0.12% 0.22 31.00% 0.08% 0.05% None 68.242812
EWG iShares MSCI Germany ETF $66.69 M 0.03% 6.66 31.00% 0.28% 0.02% None 89.037033
FGM First Trust Germany AlphaDEX Fund $274.88 K 0.15% 0.11 31.00% 0.42% 0.04% None 60.048908
HEWG iShares Currency Hedged MSCI Germany ETF $3.78 M 0.04% 2.66 100.00% 2.20% 0.01% None 74.331602
QDEU SPDR MSCI Germany StrategicFactors ETF $36.71 K 0.08% 0.01 31.00% 0.15% 0.04% None 59.711979
GRMY Xtrackers Germany Equity ETF $0 0.13% 0 31.00% 0.03% 0.04% None 58.575589
FLGR Franklin FTSE Germany ETF $21.0 K 0.17% -- 31.00% 0.07% 0.03% N/A 0

ETF.com/ Block Liquidity

EWG
5
4
3
2
1
DBGR
5
4
3
2
1
DXGE
5
4
3
2
1
FGM
5
4
3
2
1
QDEU
5
4
3
2
1
GRMY
5
4
3
2
1
HEWG
5
4
3
2
1
FLGR
5
4
3
2
1

This measurement shows how easy it is to trade 25,000 shares of each ETF.

ETF.com Fit Insight

EWG, HEWG and DBGR all provide relatively straight-forward market cap-weighted exposure to the German equity market. Meanwhile, FGM offers a restructured portfolio, while DXGE has afor broad-based exposure to the German equity market, EWG is your best choice multi-factor selection process and weights its constituents based on dividends. QDEU offers exposure to three different factor indexes.
EWG and DBGR hold a traditional, market-cap-weighted portfolio of about 50 of the largest German companies, while HEWG literally holds EWG with a forward currency contract overlay to neutralize any euro exposure. The 3 funds are highly concentrated in the largest firms, but otherwise mirror our benchmark closely. EWG, DBGR and HEWG also have the same top holdings as our segment benchmark: Bayer, Siemens, and Daimler together comprise about 1/4 of each portfolio.
DBGR, DXGE and HEWG set themselves apart by hedging out euro exposure from their portfolios. Currency-hedging makes sense for countries like Germany that are heavily dependent on exports: The state of the economy and the currency are usually inversely related since German goods become more appealing on the global stage when the euro depreciates.
In comparison, FGM holds a tiered equal-weighted portfolio of 40 companies selected by its proprietary quant model. It excludes some of the biggest companies in favor of mid- and small-caps. It follows that FGM tilts much smaller than the market.
QDEU's "quality mix" strategy doesn't actually alter the fund's portfolio significantly. We see only mild size and sector tilts. Like FGM, QDEU isn't nearly as concentrated as competing funds, or our benchmark.
Overall, if you're looking for broad-based exposure to the German equity market, EWG is your best choice. If, instead, you trust a quant model to pick outperformers, roll the dice with FGM or QDEU. Lastly, if you want exposure to German equities without exposure to the euro, consider DBGR, HEWG or DXGE. (Insight updated 11/22/17)

All Funds (8)

96
95.891463
92
92.009084
66
65.581726
61
60.805781
47
47.439156
46
45.920801
44
43.663626
N/A
0

ETF.com Grade as 11/16/17

Equity: Germany - Total Market