The FIFA World Cup is the largest sports tournament in the world. Every 4 years, 32 countries compete to be named the champions of soccer (or football, as the rest of the world kindly reminds us). Just as we have done in the past with other competitions, like basketball’s NCAA March Madness, we love to create our own tournament within the ETF universe.
After two weeks of group stage matches, the FIFA World Cup’s 16-team bracket was made official, and this is where our ETF World Cup begins. Each round, we chose a new differentiator to choose a winner in each match up
Round of 16: Total # of US ETFs for Each Country
In the first round, we had a lot of interesting match-ups. We see obvious blowouts from the USA and Japan over the Netherlands and Croatia respectively. Australia, France, and Spain all sneak through on close, low scoring matches. England (United Kingdom, for ETF purposes) had an easy match-up with Senegal, potentially the least likely to have an associated ETF of the eligible countries. The most notable contest is between Brazil and South Korea. Brazil’s 8 ETFs contain approximately $6 Billion, while South Korea’s 4 ETFs totaled $3.4 Billion. Tough draw for South Korea here, but that’s the beauty of sports (and ETFs)!
Quarterfinals: ETF AUM (in Billions)
5 Continents are still represented in the final 8. In this round, countries are judged on total AUM in their associated ETFs. In the first match-up, USA had the obvious advantage in this category, though Australia did have the 5th most revenue of any country in the final 16 and 8. Next, Brazil went up against another Asian country, but this time fell to Japan, who is second only to the US in total ETF AUM. Next, we have a reflection of the real Quarterfinal taking place this Saturday, December 10, with England vs France. In 2018, this was our ETF World Cup Final – France was our champion and they fulfilled that prediction by winning the FIFA World Cup as well. They will not be repeat champions according to our bracket, and England will have their revenge. Lastly, Switzerland continued its Cinderella run to the semifinals, beating Spain in the closest match of the round.
Semifinals: 5-Year Performance
In sports, teams are often defined by their best player. In our semifinals, the final 4 countries will be judged on their largest ETF’s 5-year performance. In the first game, Invesco QQQ Trust (QQQ) outperformed iShares MSCI Japan ETF (EWJ) in a one-sided victory. Over the past year, EWJ had the edge on QQQ, but further historic performance gave QQQ the victory. In the second semifinal matchup, iShares MSCI Switzerland ETF (EWL) took down iShares MSCI United Kingdom ETF (EWU). Although EWU has had positive performance (2.8%) over the past 12-months (unlike the other 3 ETFs), EWL has outperformed during the 3 and 5-year outlooks.
Final: ETF Think Tank Decision
USA vs Switzerland would be a very unlikely (and now, in reality, impossible) final of the 2022 FIFA World Cup. However, it is the David vs Goliath story of our 2022 ETF World Cup. To decide our champion, we used a few different criteria:
- QQQ wins the Expense ratio category (0.20 to 0.50)
- EWL wins the “Toroso Diversification Score” (92.6 to 53.9)
- EWL wins in Yield (1.99 to 0.67)
- QQQ is rated an A on ETF.com’s rating while EWL is a B
- While EWL outperforms in 3-month performance (8.1% to -0.7%), QQQ’s 3-year performance was better (13.7% to 5.8%)
The Tiebreaker: Soccer perspective, of course.
Switzerland is currently ranked 15th in the world on FIFA’s rankings, while USA are 16th. And unfortunately, when the USA faced off against the Swiss in 2021, Switzerland came out on top 2-1. Consequently, Switzerland is our 2022 ETF World Cup Champion!
But we want to hear from our readers: Which would you choose to invest in today? Which country should have gone farther in the bracket?
Maybe in 4 years, the USA will win its first FIFA and ETF World Cups on home soil.
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Topics: Weekly Research