Visiting the France ETF Following Macron's US Visit

French President Emmanuel Macron visited the White House Tuesday, nine months after President Donald Trump visited him in Paris. Macron's visit marked the first state dinner of Trump's presidency. Macron and Trump discussed, among other issues, North Korea, the Iran nuclear deal and the U.S. role in the Paris climate accord.

Macron has even acknowledged some similarities between himself and Trump, noting that both are political outsiders that surprised the so-called experts with their respective victories. With U.S./French relations apparently strong, investors may want to have a look at French stocks and the related exchange-traded funds (ETFs), including the iShares MSCI France ETF (EWQ). (See also: The Economic Indicators of France's Economy.)

EWQ, the only U.S.-listed ETF dedicated to stocks in the Eurozone's second largest economy, spent plenty of time in the limelight in the first and second quarters of 2017, leading up to and immediately following the national election there that saw Macron emerge victorious. EWQ posted a 2017 gain of 29.1%, outpacing the MSCI EMU Index by 120 basis points. The France ETF is extending its outperformance of that widely held Eurozone equity benchmark this year with a gain of 4.3%, an advantage of 180 basis points over that index.

"Earnings expectations have moderated in recent months. However, EWQ has steadily outperformed EZU (iShares MSCI Eurozone ETF) for most of the past year, and has seen that outperformance accelerated coming out of the February/March rally as many of the Eurozone countries also saw 1Q18 economic weakness," according to BlackRock.

EWQ tracks the MSCI France Index and holds 79 stocks. Over the past 12 months and year to date, EWQ is beating the comparable Germany, Switzerland and U.K. ETFs. EWQ has a three-year standard deviation of 13.81% compared with 14.53% on the MSCI EMU Index. Investors remain interested in EWQ, as data confirm. "February/March volatility has seen cumulative YTD EWQ inflows fall to +$106 million; however, the trailing one year inflow is still +$423 million. Shares outstanding continues to grow, indicating ongoing investor interest," noted BlackRock.

As of April 24, EWQ had 26.80 million shares outstanding and $876.17 million in assets under management. EWQ allocates over 40% of its combined weight to the industrial and consumer discretionary sectors, but higher oil prices could help the fund. French oil giant Total SA (TOT) is EWQ's largest holding, making up all of the fund's almost 9% energy weight. (For additional reading, see: France ETFs Explained.)

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