My goodness: Ireland ETF up over 40% in a year


It’s St. Patrick’s Day and Irish eyes are smiling, along with investors who have been lucky enough to participate in this market’s stunning rally.

Believe it or not, Ireland is actually one of the world’s hottest stock markets over the past year.

The iShares MSCI Ireland Capped ETF (EIRL) is up more than 40% for the trailing 12 months ended March 13. The ETF had a three-year annualized return of about 25% versus 15% for the S&P 500.

EIRL Chart

EIRL data by YCharts

In 2013, the Irish Stock Exchange Overall (ISEQ) Index posted its best year since 1997 with a gain of nearly 34%. Ireland was also Europe’s top-performing market last year.

Ireland’s equity market is being boosted by an improving economy, increasing consumer confidence, falling unemployment, reviving domestic demand and rising exports, according to Zacks Investment Research.

It has been a surprising rally for a market that has been grouped with the so-called PIIGS (Portugal, Italy, Ireland, Greece and Spain) during the Eurozone debt crisis. Yet Ireland was the first Eurozone country to leave the international bailout program in late 2013.

Ireland’s GDP fell slightly last year but the economy is gaining momentum as unemployment continues to fall, AFP reports. Ireland also successfully placed its first issue of long-term debt since 2010 in a sign of growing market confidence over the country’s economic health, according to the report.

“Falling unemployment, rising retail sales and improving confidence point towards a further strengthening of the economy,” said analyst Anthony Baert at ING Financial Group in the article.

Dublin-headquartered ICON plc (ICLR) is one of the largest stocks in the iShares MSCI Ireland Capped ETF by market cap. The stock has benefited from a rising local market and strength in the healthcare sector.

“ICON helps other companies run clinical programs to test newly developed drugs or medical devices or procedures. ICON does roughly half its business in the U.S. and the balance around the world,” says Barry Randall, who owns the stock in the Crabtree Technology portfolio on Covestor. “Coming off a ‘beat-and-raise’ fourth quarter, ICON heads into 2014 benefiting from what I believe is very solid management and also a large backlog of business funded by the high number of biotech and pharmaceutical companies going public.”

Photo Credit: kitchener.lord

DISCLAIMER: The investments discussed are held in client accounts as of February 28, 2014. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. ETF shares trade like stocks, are subject to investment risk and will fluctuate in market value. The information in this material is not intended to be personalized financial advice and should not be solely relied on for making financial decisions. All investments involve risk, the amount of which may vary significantly. Past performance is no guarantee of future results.