For years, investors were down on European investments, choosing instead to focus on the domestic market for exposure. You can’t blame anyone for this approach either, as the continent was struggling with major issues regarding debt and even the very health of the common currency.
Lately, however, Europe has been coming back and it has actually seen some inflows as well. Investors are apparently embracing the more positive trends in Europe and are willing to bet on the region once more (also read 4 Outperforming ETFs Leading Europe Higher).
After all, manufacturing sentiment and investor confidence are rising, while stock prices have also been firm. The euro has also seen good trading against the dollar, while the debt of the PIIGS nations has seen their spreads collapse against safer nations, signaling that investors aren’t as worried about risks in these countries anymore.
How to Play
In this type of environment, a look to European ETFs may be an intriguing idea. These have seen solid trading lately, and given the tailwinds, could remain decent picks in the months ahead as well. For investors intrigued by this idea, we have highlighted some of our favorites in this space below:
First Trust Europe AlphaDEX Fund (FEP) –This ETF is a broad choice for European exposure, using the AlphaDEX system to select only the best stocks for inclusion. The portfolio is quite spread out as well, as no single firm makes up more than 1.25% of the total assets (see all the European Equity ETFs).
WisdomTree Europe Small Cap Dividend ETF (DFE) – If you are looking for a play that targets companies which are most impacted by European events, consider this small cap product. The fund also has a 3% 30-Day SEC yield and it is dividend weighted, so income will definitely be a big part of this fund’s risk return profile.
iShares MSCI United Kingdom Index Fund (EWU) – For a single country play, investors may want to take a look at the UK and EWU for exposure. The country is seeing growth—unlike some in Europe—while its focus on financials, consumer staples, and energy could be a winning strategy in today’s market environment (read Can UK ETFs Continue to Rise?).
For more on Europe ETFs and the positive trends in the space, watch our short video on the subject below:
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