EU Equities Saw Inflows on Long-Term Prospects
Global Equities Fell on Downgrades and Lower Output
Inflows
In the week ended September 25, EU (European Union) equities (EFA) saw total inflows of $2.4 billion, compared to inflows of $24 million in the previous week. Investors deployed funds on marginally better industrial output, less competition from China, and industrial production. EU equities saw inflows in three out of the past five weeks.
Major asset managers that focus on EU equities include BlackRock (BLK), Goldman Sachs (GS), Deutsche Bank AG (DB), Morgan Stanley (MS), Vanguard, BNP Paribas (BNP), and UBS Group (UBS). The better-performing Eurozone region should attract higher funds to Europe-specific offerings.
The Eurozone is poised for higher growth among the major economies, since it’s better positioned fundamentally to deliver on higher exports to the United States and other consumer-oriented economies.
ETFs are attracting investments
Major ETFs that attracted investments included the Vanguard FTSE Developed Markets ETF (VEA), the iShares MSCI EAFE ETF (EFA), the WisdomTree Europe Hedged Equity ETF (HEDJ), the iShares MSCI United Kingdom ETF (EWU), the iShares MSCI EMU ETF (EZU), the iShares Europe ETF (IEV), the Vanguard FTSE Europe ETF (VGK), and the Deutsche X-trackers MSCI Europe Hedged Equity ETF (DBEU). Together, these funds attracted $700 million in the week ended September 25.
The major ETFs that saw outflows were the iShares MSCI Germany ETF (EWG) and the SPDR EURO STOXX 50 ETF (FEZ). Together, these funds saw outflows of $29 million in the week ended September 25.
These ETFs are expected to continue to attract funds, especially while there’s an opportunity for long-term investors to enter with marginal losses. Mutual funds and ETF providers would benefit from strong performances by EU equities. With the certainty of Greece’s bailout plan, the performance of EU economies should attract long-term funds.
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