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Is the Celtic Tiger roaring again?

Ireland’s rebounded from bailout to world-beating economy.

The Irish economy has surged 4.8% this year, making it the fastest growing economy in Europe, and among the fastest in the world.

Investors are daring to hope that Celtic Tiger is roaring again.

The growth is impressive considering that a year ago the country was just finishing its three-year EU-International Monetary Fund bailout programme.

According to its latest economic outlook for the Irish economy, EY (formerly Ernst & Young) predicts that growth will settle at about 3.3% next year. EY also predicts that the Republic will stay near the top of European growth charts and grow faster than rest of the UK for the next ten years.

With inflation across the Eurozone sliding into deflation, it is also impossible to not notice when the ratings agencies actually upgrade a European nation. That is particularly true of the PIIGS (Portugal, Italy, Ireland, Greece, Spain). Last week (December 5) Standard & Poor’s upgraded the Republic from an A- to an A.

The Irish government is now expected to ease up on the austerity measures it was forced to impose three years ago, which will encourage growth.

For believers, the iShares MSCI Ireland Capped Exchange Traded Fund (ETF) could be a way to get in on the Irish recovery. The fund is up 3.68% for the year to date, although this is marginally lower than the 3.91% growth of the benchmark, the MSCI All Ireland Capped Index.

The ETF is tradable through the Standard Bank WebTrader platform.

The top five holdings include building materials group CRH which has operations in the US, UK and Ireland; the Kerry Group which provides food, food ingredients and flavours to the Irish and UK markets; the Bank of Ireland which returned to profit in the first six months of this year; Irish bookmaker Paddy Power and Kingspan, a manufacturer of firesafe insulated roof and wall cladding systems, composite panels, cold stores and flat wall panels.

While index aims to provide exposure to a broad range of Irish companies, it is interesting to note that it has no resource stocks and less than 20% of the index is in financials. “Most emerged and even emerging market ETFs are heavy in financials,” says Simon Brown of Just One Lap.

For some investors this bias could prove attractive.

The ETF makes two distributions per year and offers a distribution yield of 1.89%. It trades on a price to earnings multiple of around 22 times historical earnings.

** This is a sponsored education series focused on offshore investing. The content is sponsored by Standard Bank WebTrader and Moneyweb are the content creator.

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