This post is part of a series written by ETF Trends editor Tom Lydon, special for CNBC.com.
On this day, we’re all Irish, even if the Emerald Isle has fallen on hard times.
The famously cheerful country was beset with struggle after struggle during the global economic crisis: unemployment soared to 13 percent, retail sales collapsed 15 percent, the housing market collapsed, banks fell one by one and, as a result of bailout efforts, Ireland’s deficit to GDP ratio hit 12.5 percent — second only to Greece.
Ireland was also once an appealing destination for immigrants, but it has since returned to net emigration. Ouch.
Better days, though, might be ahead for the Emerald Isle:
- Joblessness has eased up to 12.6%; although it’s still high, it’s stopped rising
- The country has a well-organized plan to deal with toxic debt; they started a “bad bank” to buy such debt from other banks; at the end of this month, the capital position of those banks will be more clear
- Ireland was the first country in the European Union to guarantee all their bank debt
- Foreign investment is making a comeback: in 2008, the country had $20 billion in outflows; in 2009, there was $14 billion in inflows
- In general, foreign investors like Ireland: there are tax incentives for companies doing business there, there are high education standards, low marginal tax rates and strong ties to the United States
Right now, there are no exchange traded funds (ETFs) to play Ireland. Northern Trust launched one in challenged markets in 2008 and shuttered their entire line of ETFs a year later. iShares, PowerShares and State Street have their own funds in registration, so we could very well see some Ireland ETFs in the next year.
Investors who want exposure to Ireland right now could check out a closed-end fund (CEF), The New Ireland Fund. The fund is not only on sale now, trading at a 15 percent discount, but it has rallied 118 percent since the market’s low reach on March 9, 2009.
As a result of the crisis, IRL is now heavy on Ireland’s growth companies and banks are absent from the top 10 holdings in the fund. The top three holdings are CRH PLC, a building and construction company; Ryanair, an airline; and DCC PLC, a business services corporation.
Tom Lydon is the editor of and author of iMoney: Profitable ETF Strategies for Every Investor.