ETF Assets Show Disproportionate Interest In UK

August 25, 2014

ETF investors are avoiding France and shoveling assets into Germany and the U.K.

EWU_EWG_EWQ_1yr

Chart courtesy of StockCharts.com

The U.K represents roughly 15 percent of the European Union by GDP, but ETF assets show a disproportionate interest in the country: 29 percent of ETF assets invested in European Union countries are invested in the U.K. The majority of those assets are invested in the iShares MSCI United Kingdom ETF (EWU | B-93).

Those figures stand in stark contrast to France—which ETF investors have readily avoided: While France generates 16 percent of the European Union's GDP, ETF assets invested there are less than 2 percent of the total for EU countries. The only U.S.-listed ETF investing comprehensively in the French economy is the iShares MSCI France ETF (EWQ | A-97).

It's not a stretch to say that there's a real connection to economic policies. According to Reuters, French President Hollande today asked his prime minister to form a new government as "France has lagged other euro zone economies in emerging from a recent slowdown."

Interestingly, ETF assets invested in most of the other EU countries were within a couple percent of their contribution to EU GDP—indicating investors are neither overallocating nor underallocating to those economies.

Germany, however, was another standout, as it registered disproportionate interest from ETF assets. Germany commands 21 percent of the EU economy has but 32 percent of ETF assets invested in EU countries. The iShares MSCI Germany ETF (EWG | A-97) has more than $4.5B in assets under management.

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