IBEX 35 (ES35), Spain’s main market index have been underperforming its Eurozone peers on a year-to-date basis.  So far this year, CAC40 (France), DAX30 (Germany) and IT40 (Italy) have gone up between 15 and 20% while the ES35 only gained around 9.51% (as of 12:30 pm Wednesday 8th of September, GMT +2). It has also lagged the MSCI Europe index, which gained around 14.37% during the same period.

The main reason for the underperformance is the concentration of defensive and cyclical shares in the ES35 composition, such as banks, utility and telecom companies which tend to lag growth stocks in general, such as technology.

The underperformance of the Spanish market may represent a buying opportunity for value investors. Spain ETFs can be a medium to gain diversified exposure to Spanish equities, such as the iShares MSCI Spain Capped ETF (EWP). EWP provides exposure to Large and Mid-Cap Spanish Equities and tracks the MSCI Spain 25/50 Net Total Return Index. It has $710 million in assets and holds Iberdrola SA (18.75%), Banco Santander SA (15.72%) and Banco Bilbao Vizcaya Argentaria SA (10.82%) among its top holdings. For more exposure to the IBEX 35, investors can view the Lyxor IBEX 35 (DR) UCITS ETF (LYXIB).

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