Top First Quarter European ETFs

As a whole, the European equity markets have outperformed most of their developed country peers around the world; within the region, the top performing country ETFs have been often-overlooked countries such as Denmark.

iShares Denmark

The Ishares MSCI Denmark Capped ETF, which trades on the BATS exchange (ticker: EDEN) is up 12 percent during the first quarter as it trades within striking distance of its all-time high.

The ETF is made up of 40 stocks, with a heavy concentration in the healthcare sector due to a 25 percent allocation to Novo Nordisk A/S (ADR) (NYSE: NVO). The stock had a blockbuster quarter, gaining 27 percent, as it climbed to a new all-time high. The industrials and financials also make up a large portion of the ETF. The 30-day SEC yield is 1.56 percent and the annual expense ratio is 0.53 percent.

Global X Portugal

Also logging a 12 percent gain in the quarter is the Global X FTSE Portugal 20 ETF (NYSE: PGAL). The chart for PGAL is quite different, with the ETF rallying off its all-time low from early January.

Related Link: ECB QE Seems To Be Working

The efforts by the European Central Bank have spread the wealth to all countries in the region, and Portugal is starting to bounce off the proverbial mat. The ETF is composed of 23 positions, with a heavy concentration on the utilities and financial stocks. EDP-Energias de Portugal, S.A (ADR) (OTC: EDPFY) and Galp Energia SGPS SA (OTC: GLPEF) account for 35 percent of the portfolio, causing the ETF to rely on the success/failure of the two stocks. The 30-day SEC yield is 2.59 percent and the expense ratio is 0.61 percent.

iShares Germany

The largest economy in Europe has also benefited from the moves by the ECB and the iShares MSCI Germany Index Fund (ETF) (NYSE: EWG) is up 9 percent in the first three months of 2015. The ETF attempts to target access to 85 percent of the German stock market. The portfolio of 54 stocks has the most exposure to consumer discretionary, financials and healthcare. The top three holdings are large international names: Bayer AG (ADR) (OTC: BAYRY), Daimler AG (OTC: DDAIF) and BASF SE (ADR) (OTC: BASFY). The 30-day SEC yield is 1.81 percent and the expense ratio is 0.49 percent.

If the trend of more quantitative easing by the ECB continues, it should at a minimum set a floor for European equities going forward. The biggest concern is that the three ETFs mentioned above are not hedged against currency fluctuations. Therefore, continued weakness in the euro could be detrimental to the performance of the U.S.-based ETFs. There are hedged ETFs available for investors who would like to take a short position in the euro, which can mitigate the effects of a weaker euro.