Unlike many other nations that bore the brunt of the COVID-19 pandemic, Ireland’s economy expanded in 2020 partly thanks to surging exports which countered the slump in domestic demand. The country’s gross domestic product (GDP) grew 3.4% last year according to the central statistics office and despite the economy enduring a harsh winter of restrictions during the first quarter of 2021, GDP is set to recover even further in the year, thanks to growing domestic and foreign activity. At the same time, incoming EU (European Union) funds and loose ECB (European Central Bank) monetary policy is set to provide further support.
As unemployment rates ticked down in July, retail sales continued to expand and the services PMI rose through August, all this in addition to plans for lifting restrictions even further certainly bodes well for the recovery ahead.
With a positive future outlook, for investors looking to gain exclusive exposure to the so-called Emerald Isle, the iShares MSCI Ireland ETF (EIRL) is a good option.
Fund snapshot
| Fund launch date | 05/05/2010 |
| Issuer | Blackrock |
| Brand | iShares |
| Exchange | NYSE |
| Expense ratio | 0.51% |
| Net Assets | $82,721,678 |
| Net Asset Values (NAV) | $61.28 |
| Shares outstanding | 1,350,000 |
| Distribution yield | 0.56% |
EIRL overview
Offering a broad-based exposure to companies in Ireland with targeted access to Irish stocks, the iShares MSCI Ireland ETF seeks to track the investment results of the MSCI All Ireland Capped Index, a market-cap-weighted index, which consists of Irish companies that meet MSCI’s country classification. As a result, it includes companies that are headquartered or listed in Ireland, as we well as those whose majority of operations are in the country.
EIRL invests at least 80% of its assets in the component securities of the underlying index and in investments that have economic characteristics that are to a great extent close to the component securities of the underlying index.
On the other hand, the underlying index ensures it is sufficiently diversified by employing a capping methodology so that no company exceeds 25% of the index weight, whereas that aggregate weight of those with over 5% weight in the index is capped at 50% of the portfolio.
What are EIRL’s top holdings?
As of August 30, 2021, the iShares MSCI Ireland ETF has 22 holdings. The materials sector, which consists of businesses engaged in the discovery, development and processing of raw materials and are typically engaged in mining and metal refining, chemical products, as well as forestry products, occupy the larger part of the ETF, at 26.86%, while consumer discretionary amounts to 22.03%. Other sectors the ETF covers include industrials, consumer staples, financials and healthcare, to name a few.
From a geographical standpoint, Ireland-based companies top the list at 88.36% and while the ETF highly targets the country, it does invest in other nations. For instance, Ireland is followed by the U.S. at 4.91%, after which comes the UK at 4.86%. One more country covered is Luxembourg, while the ETF also invests a small percentage, approximately 0.75% in cash and/or derivatives.
Here is a breakdown of the ETF’s top holdings:
| TICKER | COMPANY | MARKET VALUE ($) | WEIGHT% |
| CRH | CRH plc | 18,667,627.75 | 22.37 |
| FLTR | Flutter Entertainment plc | 18,396,456.76 | 22.05 |
| A5G | AIB Group | 3,806,533.19 | 4.56 |
| ICLR | Icon plc | 3,806,056.52 | 4.56 |
| BIRG | Bank of Ireland Group plc | 3,776,259.47 | 4.53 |
| GL9 | Glanbia plc | 3,708,177.42 | 4.44 |
| RYA | Ryanair Holdings | 3,676,388.66 | 4.41 |
| SKG | Smurfit Kappa Group plc | 3,675,510.26 | 4.40 |
| KRX | Kingspan Group plc | 3,649,151.68 | 4.37 |
What has EIRL’s performance been like?
Since its inception back in 2010, EIRL has had a positive trajectory with the exception of March 2020, when it dipped to $26.67 on March 20. Having said that, it has since recovered well, currently trading at an all-time high of $61.63 on September 1, 2021.
Considering a hypothetical scenario, a $10,000 investment in the ETF at the fund’s inception and assuming that all dividends and capital gains are reinvested, your initial investment would have turned into $34,998 on September 1, 2021, marking a 249.98% return.
Historically, the average annual total returns the ETF has generated include the following as of July 31, 2021:
- 1 year – 43.97%
- 3 years – 8.84%
- 5 years – 10.67%
- 10 years – 12.47%
Meanwhile, according to the MSCI ESG Fund Rating, which measures the resiliency of portfolios to long-term risks and opportunities that may arise from environmental, social and governance (ESG) factors, EIRL has a score of AA – with AAA regarded as the best and CCC as the worst – and a quality score of 8.2 out of 10. The ETF’s rating reflects that the companies it invests in can effectively manage ESG issues, while they may be more resilient to any disruptions arising from these events, which is a positive observation.
Is EIRL a buy?
As the coronavirus has swept across the globe leaving its mark on virtually every industry and business, small and large, Ireland has not been left unscathed. From supply chain disruption to uncertain consumer demand and some business sectors having to more or less grind to a halt, the Irish business landscape has also been affected by the pandemic. Yet, surprisingly, the Irish Gross Domestic Product (GDP) grew 3.4% in 2020 according to the Central Bank, despite a number of national lockdowns, all thanks to strong growth from the pharmaceuticals industry, computer and business services.
Prior to the pandemic, Ireland had been flourishing in recent years, surpassing other member states and becoming one of the fastest growing economies in the EU. For instance, in 2019, its GDP had grown by 5.5%. At the same time, leading rating agencies had given it upbeat prospects and had anticipated that it would manage to weather any tensions caused by Brexit, trade related concerns and geopolitics.
Now, with the global markets steady thanks to a range of fiscal policies and the easing of COVID-19 restrictions, coupled with the option of low-income producing bonds has seen a score of investors pouring their money in the equity world and this has boded well for ETFs too. In fact, EIRL is up 21.3% year-to-date. And there’s more good news. The Davy Group, one of the largest financial services companies in the country, upped its forecast on Ireland’s GDP growth from 4.8% to 10%. Meanwhile, the boom in both the multinational sector and exports are also expected to expand by a 15% each this year.
Likewise, some Irish companies boasting strong fundamentals, solid returns and consistent dividend payouts, have had a positive 2020 and this year appears to be just as promising. Kingspan (KGP), the global leader in high-performance insulation and building envelope solutions, with 150 manufacturing facilities and over 15,000 employees, has had a robust financial performance even during 2020, with total revenue for the year amounting to €4.6 billion, while trading profit was up by 2% to €508.2 million. Meanwhile, its EPS (earnings per share) was also up 1% to 206.2 cents.
On the other hand, top manufacturer and distributor of building materials across the globe, CRH (CRH), saw its revenue, EBITDA and operating cash flow all significantly ahead when compared to the same period last year. Sales revenue for the six months ended June 30, 2021 was 15% ahead of the same period last year, at $14 billion, whilst EBITDA was 25% ahead at $2 billion. At the same time, the company’s operating cash flow increased by 55% to $1.6 billion.
Lastly, although perhaps too targeted for buy-and-hold portfolios, the ETF is nevertheless a good option for investors looking to fine tune their exposure in Europe.
How to invest in the iShares MSCI Ireland ETF with Moneybase Invest
Ready to invest in EIRL? Your first step to tapping into a world of investment opportunities with Moneybase Invest is to sign up and open an account.
To do so:
- Download the app from either Google Play or the Apple App Store. Alternatively, you may access Moneybase Invest on your desktop by visiting https://live.cctrader.com/
- Once you’ve onboarded successfully and have funded your account, head over to the search bar at the top of your screen and input either the company name or ticker symbol.
- Select the instrument of your choice from the list and then click on the Buy button on the window located at the bottom of your screen.
- On the New Order page, input the number of shares you would like to purchase and hit the Place Buy Order. EIRL has been added to your portfolio.
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The contents of this article are not intended to be taken as a personal recommendation to invest but strictly based on research and for information purposes only. Retail investors should contact their financial adviser for a suitability assessment prior to taking any investment decisions.
