Big Sell-Off in Germany ETFs Despite Great Returns

Most investors buy exchange-traded funds (ETFs) because they perform well on a fundamental level. However, German ETFs have been a surprising exception over the past few months. While the DAX Benchmark Index rose 12.32% between October 1 and November 1, the country’s major ETFs experienced four times the capital outflow of any other country after investor confidence was shaken by the Volkswagen scandal in September. The iShares MSCI Germany ETF ( EWG B ) experienced $355 million in outflows from investors between October 1 and November 1, with the greatest selling pressure seen at the beginning of the month. At the same time, the iShares Currency Hedged MSCI Germany ETF ( HEWG B- ) reported about $191 million in outflows over the same time frame, which suggests that the selling pressure isn’t purely due to concerns about the euro.