European Country ETFs: A Diversification Scan v3 路 watchlist
Prepared for Jason Masters 路 July 18, 2026 路 Italy, Germany, Belgium, France, Spain, tracked against EWY (South Korea) and AIA (Asia 50), the two AI-heavy funds you exited 路 performance as of July 17, 2026 close
Why this report exists. You have liquidated the South Korea fund (EWY) and the Asia 50 fund (AIA), your two positions that were heavily concentrated in artificial-intelligence (AI) and semiconductor stocks. You no longer own either, but you want to keep watching them, to see how far they fall and whether they turn around. This report keeps both as reference lines and compares them against five European single-country ETFs (Exchange-Traded Funds, baskets of stocks you buy as one ticker), to show, in pictures, how the calmer European alternatives are behaving while your two former holdings sell off. This v3 adds AIA and reframes EWY as a watched former holding (the June 29 and prior July 18 versions are superseded).
Your two former holdings are both mid-drawdown, and neither has turned yet. Both peaked in June and have sold off since, exactly the concentration risk you exited to avoid:
- EWY (South Korea): peaked $219.20 on June 18, now $162.54, down -25.9% off its peak and still sliding (it fell again in the final days to July 17). This is its worst drop of 2026, not yet recovered.
- AIA (Asia 50): peaked $150.17 on June 22, now $130.08, down -13.4% off its peak and also sliding through mid-July. Its deepest 2026 drop was the spring sell-off (-14.2%); this summer slide is nearly as deep.
Both funds are dominated by the same names, SK hynix and Samsung sit in EWY, and TSMC, Samsung, and SK hynix sit in AIA, so they tend to fall together. No turnaround signal in the data as of July 17. The five European funds barely moved over the same stretch.
Peak and latest adjusted closes from stockanalysis.com daily history (EWY, AIA), accessed 2026-07-18. "Off peak" = latest close vs. the highest 2026 adjusted close. Worst-2026-drop figures computed from the daily series.
1The one-minute scoreboard
Every figure below is a real, sourced number. Price, YTD, and 1-year total return are read from stockanalysis.com (accessed July 18, 2026). "Worst drop 2026" is the worst peak-to-trough fall this year, computed from each fund's own daily total-return series (see sources). The top two rows, EWY and AIA, are your former holdings, shown for watching; the five below are the European alternatives.
| Fund | Country | 2026 YTD | Past 1 year |
Worst drop 2026 | What drives it | AI / tech |
| EWY exited | 馃嚢馃嚪 South Korea | +67.2% | +127.4% | -25.9% | Memory chips (SK hynix, Samsung), AI demand | Very high |
| AIA exited | 馃審 Asia 50 | +33.9% | +58.8% | -14.2% | Asian chips + tech (TSMC, Samsung, Tencent) | Very high |
| EWP | 馃嚜馃嚫 Spain | +11.5% | +38.4% | -11.4% | Banks, utilities, tourism | Low |
| EWI | 馃嚠馃嚬 Italy | +13.1% | +30.4% | -12.5% | Banks, utility, energy | Low |
| EWK | 馃嚙馃嚜 Belgium | +9.8% | +21.8% | -15.5% | Beer, pharma, defensive | Low |
| EWQ | 馃嚝馃嚪 France | +2.7% | +8.7% | -13.8% | Luxury, aerospace, energy | Low |
| EWG | 馃嚛馃嚜 Germany | -1.2% | -0.5% | -14.5% | Industry, insurance, software, chips | Medium |
Price, YTD total return, and 1-year total return: stockanalysis.com fund pages (EWY, EWP, EWI, EWK, EWQ, EWG), accessed 2026-07-18; returns include dividends. Worst-drop values are computed by analysis from each fund's daily dividend-adjusted close over 2026 (stockanalysis.com history API), not printed on the page. AI/tech rating: author's classification from holdings (see country cards).
Past-1-year total return (note EWY is still in a different league, even after its drop)
Worst drop during 2026 (how bumpy the ride was)
Same sources as above. A bigger drop means more stomach-churn to hold it. EWY's -25.9% is an ongoing drawdown from its June 18 peak; AIA's -14.2% was its spring low, and it is again near that level after its June-July slide.
2The 2026 story in plain English
If South Korea's run was an AI story, Europe's 2026 is a banks-and-defense story. They are almost opposites, which is exactly why Europe diversifies you, and why EWY's summer sell-off barely touched the European funds.
Banks led again. Higher-for-longer interest rates let European banks earn fat profits, pay big dividends, and keep merging. Because Spain and Italy are stuffed with banks, their funds stayed near the front through the first half of 2026 (Spain +38% and Italy +30% over the past year). Fund 1-year total returns: stockanalysis.com EWP, EWI, accessed 2026-07-18. Theme: Euronews, "European banks' best year on record," Dec 2025.
Defense and rearmament is the other big theme. Europe keeps spending heavily on weapons and power equipment, which shows up in Germany (Siemens Energy), France (Safran, Airbus), and Italy (Leonardo). This is the one place Germany's index is winning even while its carmakers lose. Theme source: XTB market wrap, 2026. Holdings: stockanalysis.com, July 2026.
Spain is still the macro star. Record tourism, falling unemployment, and growth above the European average keep Spanish stocks strong, on top of the bank boom. Source: Invezz / TradingView, "Why Spain's IBEX jumped," 2025-2026; Plus500 "Spanish stocks lead EU markets," 2026.
France and Germany still lag, for the same reasons. France is weighed down by luxury (Chinese shoppers pulled back) and Paris political and budget noise; it is up just +8.7% over the year. Germany is the only one of the five actually negative over 12 months (-0.5%), held back by carmakers losing to Chinese rivals even as its defense and industrial names climb. Fund 1-year total returns: stockanalysis.com EWQ, EWG, accessed 2026-07-18. Theme: Bloomberg "French stocks' LVMH woes," Jan 2026; BBN Times CAC 40 review, 2026.
3Growth of $100 this year
Both charts start every fund at $100 at the end of 2025 (dividend-adjusted). The first shows all seven together, so you can see how far above everyone EWY and AIA ran, and how hard both have fallen back since June. The second zooms in on just the five European funds so you can actually tell them apart.
All seven funds (your two exited AI funds, EWY and AIA, plus the five European alternatives)
The five European funds, zoomed in
stockanalysis.com dividend-adjusted close, rebased to 100 at the 2025 year-end close, weekly points through 2026-07-17, accessed 2026-07-18. Legend percentages are each fund's 2026 YTD total return.
4Country by country: what you would actually own
Each card shows the five biggest holdings (the bar width is the weight in the fund), what is driving it, and how much AI or tech is really inside. Colors mark the sector. Holdings are from stockanalysis.com, dated in each card, accessed July 18, 2026.
Bank
Utility
Energy
Insurance
Luxury
Defense/Aero
Pharma
Tech/Chips
Consumer
Industrial
Retail
馃嚜馃嚫Spain
EWP 路 iShares MSCI Spain 路 $59.16
2026 YTD+11.5%
1 year+38.4%
Worst drop-11.4%
Why it leads: three banks plus a giant utility, riding the best banking year on record and the strongest economy in Western Europe (record tourism, rising wages, falling joblessness). This is a yield-and-value fund, not a growth fund.
AI / tech inside: Low No semiconductors and no AI hardware in the top holdings. Nearly half the fund is three banks plus one utility.
Holdings as of 2026-07-13. Source: stockanalysis.com/etf/ewp/holdings/, accessed 2026-07-18.
馃嚠馃嚬Italy
EWI 路 iShares MSCI Italy 路 $60.26
2026 YTD+13.1%
1 year+30.4%
Worst drop-12.5%
Why it is strong: two big banks lead, with more banks further down the list, riding high rates to record profits and a wave of mergers. A big utility (Enel) sits alongside. Ferrari and defense maker Leonardo add some spice.
AI / tech inside: Low Essentially none. This is a bank, utility, and energy fund.
Holdings as of 2026-07-02. Source: stockanalysis.com/etf/ewi/holdings/, accessed 2026-07-18.
馃嚙馃嚜Belgium
EWK 路 iShares MSCI Belgium 路 $26.36
2026 YTD+9.8%
1 year+21.8%
Worst drop-15.5%
Why it holds up: the most defensive fund here. Nearly half is beer (AB InBev) and pharma (argenx, UCB), things people buy in any economy. Steady gains, but note the top two names are over a third of the fund, so it is concentrated in its own way.
AI / tech inside: Low None. Closest to a "boring on purpose" holding.
Holdings as of 2026-07-07. Source: stockanalysis.com/etf/ewk/holdings/, accessed 2026-07-18.
馃嚝馃嚪France
EWQ 路 iShares MSCI France 路 $45.14
2026 YTD+2.7%
1 year+8.7%
Worst drop-13.8%
Why it lags: France's luxury giant LVMH sagged as Chinese shoppers pulled back, and Paris politics added worry. Aerospace and defense (Airbus, Safran) and energy cushioned it. The most evenly spread fund of the five, no single stock above about 8%.
AI / tech inside: Low No AI names. Schneider sells electrical gear used in data centers, an indirect, mild link at most.
Holdings as of 2026-07-15. Source: stockanalysis.com/etf/ewq/holdings/, accessed 2026-07-18.
馃嚛馃嚜Germany
EWG 路 iShares MSCI Germany 路 $41.16
2026 YTD-1.2%
1 year-0.5%
Worst drop-14.5%
Why it is flat: Germany is the odd one out, and the only one of the five negative over the past year. Its big carmakers are losing ground to Chinese rivals, which dragged the index even as defense and industrial names (Siemens Energy) climbed. It also ran up hard in 2025, so 2026 has been a giveback.
AI / tech inside: Medium Germany now carries two tech names in its top five: SAP (enterprise software, ~8.8%) and, new since our last look, Infineon (a semiconductor maker, ~5.5%). That is roughly 14% in software-and-chips, the most of any fund here. Note the nuance: Infineon's chips mainly serve cars, industry, and power, not the AI-datacenter memory market that drives your Korea fund. So Germany reintroduces some chip exposure, just not the same AI bet. It still diversifies you less than the other four.
Holdings as of 2026-07-13. Source: stockanalysis.com/etf/ewg/holdings/, accessed 2026-07-18. Note: since the June 25 snapshot, Allianz moved ahead of SAP and Infineon entered the top five in place of Deutsche Telekom.
5What this means, now that you are out of EWY and AIA
The core trade-off, in one breath
Your two exited funds still show big one-year gains (EWY +127%, AIA +59%), but the last month is the warning label: EWY has fallen -26% off its June peak and AIA -13%, and neither has turned. The European funds gave -0.5% to +38% over the year, with drops of roughly 11% to 15% and no summer collapse. The high, violent ceiling you left behind is exactly what is unwinding now; the calmer European ride is the alternative. That is the whole point of diversifying, and it is a choice about how much volatility you want to live with, not a free lunch.
1. All five still reduce your AI and chip bet, four of them cleanly. Spain, Italy, Belgium, and France hold no meaningful semiconductor or AI-hardware makers. The one wrinkle is Germany, which now pairs SAP (software) with Infineon (chips) in its top five, about 14% combined. If escaping AI concentration is the goal, Spain, Italy, Belgium, and France do it most cleanly; Germany does it least.
2. But single-country funds are still concentrated, just differently. Spain is nearly half banks-plus-one-utility. Italy has two banks worth ~29% at the top. Belgium is a third beer-and-one-biotech. You would be swapping a chip bet for a bank bet (Spain, Italy) or a consumer-staples bet (Belgium). That is far less extreme than EWY's ~45% in two chip names (SK hynix + Samsung), but it is not broad diversification on its own.
3. If you want real diversification, think core-plus-tilt. A single broad Europe fund (for example Vanguard FTSE Europe, ticker VGK, at 0.06% a year, or iShares Core MSCI Europe, ticker IEUR, at 0.09%) spreads you across all these countries and sectors at once, so no one bank or chipmaker decides your year. Broad Europe returned about +18% over the past year with a worst 2026 drop near -12%, calmer than any single country here. You could hold that as a core, then add a country fund or two as a tilt if you have a specific view. Note: VGK and IEUR are flagged here as the natural core, and are analyzed in the companion "Full Universe and Fees" report.
4. Matching to your stated goal. You said you want a long-term holding, not a momentum trade. On that test, the bank-and-utility funds (Spain, Italy) are classic income-and-value holdings, Belgium is the defensive sleeper, France is a cheaper diversified blend that is currently out of favor, and Germany is a turnaround bet that depends on its carmakers recovering.
Broad-Europe figures: VGK 1-year total return +18.29%, worst 2026 drop -12.09% (computed); expense ratios VGK 0.06%, IEUR 0.09%. Source: stockanalysis.com, accessed 2026-07-18. EWY top holdings SK hynix 23.2% + Samsung Electronics 21.7% (as of 2026-07-16); AIA top holdings TSMC 24.5% + Samsung 14.0% + SK hynix 4.0% (as of 2026-07-16). Source: stockanalysis.com holdings pages for EWY and AIA, accessed 2026-07-18.
6Glossary, sources, and the fine print
ETF (Exchange-Traded Fund): a basket of many stocks you buy and sell as a single ticker, like one stock.
2026 YTD (Year-To-Date): the total return from the 2025 year-end close through July 17, 2026.
Total return: price change plus dividends. All returns here include dividends.
Worst drop / Max drawdown: the largest fall from a high point to a later low point during 2026. A rough measure of how nerve-wracking the holding was.
MSCI (Morgan Stanley Capital International): the company whose country indexes these iShares funds track.
ECB (European Central Bank): the eurozone's central bank, which sets interest rates that drive bank profits.
M&A (Mergers and Acquisitions): companies buying or combining with each other.
Sources
Price, YTD total return, and 1-year total return (all include dividends): stockanalysis.com fund pages, symbols EWY, AIA, EWP, EWI, EWK, EWQ, EWG, accessed 2026-07-18. Prices are the 2026-07-17 close. EWY and AIA are former holdings, shown for watching only.
Growth-of-$100 charts and worst-drop figures: computed by analysis from each fund's daily dividend-adjusted close (stockanalysis.com history API, range 2Y, accessed 2026-07-18), rebased to the 2025 year-end close. These two items are calculated, not read off a page; chart endpoints reconcile exactly to the page-reported YTD figures.
Fund holdings (dates shown per card, July 2 to July 15, 2026): stockanalysis.com holdings pages, e.g. EWP, EWI, EWK, EWQ, EWG.
Market drivers (thematic context, dated): Euronews "European banks' best year on record" (Dec 2025); XTB market wrap, 2026; Invezz / TradingView on Spain's IBEX; Plus500 "Spanish stocks lead EU markets"; Bloomberg "French stocks' LVMH woes" (Jan 2026); BBN Times CAC 40 reviews, 2026.
Prepared by Claude for Jason Masters on 2026-07-18 for personal research; supersedes the 2026-06-29 version (v1). This is an educational summary of public data, not investment advice or a recommendation to buy or sell any security. Past performance does not predict future results. Returns are dividend-adjusted total returns in US dollars; for a US investor, part of a European fund's return comes from the euro's move against the dollar, which can help or hurt. Verify all figures against the fund providers' own pages before acting.