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According to recent data, the German economy experienced a slight contraction in the first quarter of 2023, pushing the largest economy in Europe into a recession. This was contrary to the preliminary estimate released, which indicated that the German economy remained stagnant in Q1, barely avoiding a recession.

Below, we highlight a few ETFs with exposure to Germany that may help to navigate these uncertain conditions. These include iShares MSCI Germany ETF (EWG - Free Report), Global X DAX Germany ETF (DAX - Free Report), Franklin FTSE Germany ETF (FLGR - Free Report), iShares MSCI Germany Small-Cap ETF (EWGS - Free Report), and First Trust Germany AlphaDEX Fund (FGM - Free Report).

Let’s See How the Economy Actually Performed

According to an article from Reuters, recent data reveals that adjusted gross domestic product (GDP) experienced a 0.3% decline in the quarter, considering price and calendar effects. This decline follows a 0.5% contraction in the fourth quarter of 2022.

The statistics office highlights that inflation continued to pose challenges for the German economy at the beginning of the year. This was evident by a 1.2% decrease in household consumption on a quarter-on-quarter basis, after adjusting for price, seasonal, and calendar factors.

In contrast, investment witnessed growth in the first three months of the year, rebounding from a sluggish performance in the latter half of 2022. Additionally, positive contributions were made by the trade sector.

Are There Any Positives?

The German economy is anticipated to experience modest growth in the second quarter, as reported in a Reuters article. This growth is expected to be driven by a recovery in the industrial sector, which will outweigh the stagnant household consumption and the decline in construction activity. However, this report came before the news that the German economy had slipped into a recession, which may change the Q2 estimates.

Later last week, Germany's prominent stock market index, the DAX, achieved a new all-time high, driven by optimism surrounding advancements in U.S. debt ceiling discussions

ETFs in Focus - iShares MSCI Germany ETF (EWG - Free Report)

The iShares MSCI Germany ETF tracks the MSCI Germany Index, having exposure to large- and mid-sized companies in Germany. The fund has a basket of 60 securities having major allocations to industrials, financials, and consumer discretionary sectors, with a share of 19.39%, 16.72%, and 15.95%, respectively.

The fund has gathered an asset base of $1.76 billion, and it charges an annual fee of 0.50%. The iShares MSCI Germany ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. EWG has generated returns of 16.58% year-to-date and 11.40% over the past year.

Global X DAX Germany ETF (DAX - Free Report)

The Global X DAX Germany ETF closely tracks the performance of the DAX index with a basket of 40 securities. The fund has major allocations to industrials, financials, and information technology sectors, each having a share of 24%, 17.8%, and 14.2%, respectively.

With an asset base of $57.5 million, DAX charges an annual fee of 0.21%. The Global X DAX Germany ETF has a Zacks ETF Rank #3 with a Medium risk outlook. The fund has earned returns of 16.29% year-to-date and 14.85% over the past year.

Franklin FTSE Germany ETF (FLGR - Free Report)

The Franklin FTSE Germany ETF tracks the performance of the FTSE Germany RIC Capped Index, giving exposure to large- and mid-sized companies in Germany. The fund has a basket of 77 securities with major allocations to industrials, financials, and information technology sectors, each having a share of 19.49%, 16.7%, and 15.1%, respectively.

The fund commands an asset base of $18.2 million, and it charges an annual fee of 0.09%. The Franklin FTSE Germany ETF has a Zacks ETF Rank #3, and it has generated returns of 16.98% year-to-date and 11.76% over the past year.

iShares MSCI Germany Small-Cap ETF (EWGS - Free Report)

The iShares MSCI Germany Small-Cap ETF seeks to closely track the performance of the MSCI Germany Small Cap Index. EWGS has a basket of 114 securities with major allocations to industrials, information technology, and the materials sector, having a share of 26.94%, 15.37%, and 13.48%, respectively.

The fund has amassed an asset base of $21.5 million, and it charges an annual fee of 0.59%. The iShares MSCI Germany Small-Cap ETF has a Zacks ETF Rank #3 with a Medium risk outlook. EWGS has added 11.77% year-to-date, but it has fallen 5.51% over the past year.

First Trust Germany AlphaDEX Fund (FGM - Free Report)

The First Trust Germany AlphaDEX Fund seeks to track the performance of Nasdaq AlphaDEX Germany Index. The fund has a basket of 40 securities with major allocations to materials, consumer discretionary, and industrial sectors, each having a share of 24.86%, 18.04%, and 15.5%, respectively.

FGM has gathered an asset base of $15.6 million, and it charges an annual fee of 0.80%. The First Trust Germany AlphaDEX Fund has a Zacks ETF Rank #3 with a Medium risk outlook. The fund has added 10.56% year-to-date and 0.11% over the past year.

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