European stocks and the related exchange traded funds are unlikely to catch their U.S. rivals, but there's no denying there's some momentum building for riskier assets across the pond. The S&P Europe 350 Index is higher by 7.13% over the past month, bringing its year-to-date gain to almost 16%.
On Monday, led by strength in Germany, the Eurozone's largest economy, a broad swath of U.S.-listed Europe ETFs hit 52-week highs and the mix was encouraging as it included single-country funds representing Europe's large and small economies as well as a slew of diversified ETFs.
“German stocks on Monday rose to the highest level in more than 16 months, as the rally in European stocks continued,” reports Barron's. “Data released by information and analytics provider IHS Markit showed that the German manufacturing purchasing managers’ index rose slightly to 42.1 in October, up very slightly from the decade-worst 41.7 in September.”
Germany can be a rising tide that lifts a lot of European boats and with that sentiment in mind, let's explore some Europe ETFs that hit new highs.
JPMorgan BetaBuilders Europe ETF (BBEU)
The JPMorgan BetaBuilders Europe ETF (CBOE: BBEU) added 0.57% on Monday on its way to a new 52-week high. This fund often goes overlooked in the Europe ETF conversation, perhaps owing to the fact that at less than two years old, it's younger than many rival diversified Europe funds.
That's not a strike against BBEU. The fund is cost-effective with an expense ratio of just 0.09% per year, or $9 on a $10,000 investment and it's a sizable fund with $3.88 billion in assets under management.
BBEU holds 545 stocks with about 40 percent hailing from the U.K. and Switzerland and 29.6% being French and German equities. This JPMorgan ETF also lobs off a dividend yield of 3.28%, underscoring the superior income proposition available with European stocks relative to broader domestic benchmarks.
Deutsche X-trackers MSCI Eurozone Hedged Equity ETF (DBEZ)
Three interest rate cuts by the Federal Reserve this year haven't done much to derail the strength of the U.S. dollar. Combine that with the European Central Bank's efforts to weaken the euro and this year has been almost a perfect storm for currency hedged ETFs.
It's been so good in fact that, quiet as it has been kept, the Deutsche X-trackers MSCI Eurozone Hedged Equity ETF (NYSE: DBEZ) is slightly outperforming the S&P 500 this year. DBEZ tracks the MSCI EMU IMI U.S. Dollar Hedged Index.
DBEZ holds over 700 stocks and is comparable to rival Eurozone ETF in that it's dominated by French and German stocks. The Eurozone's two largest economies combine for about 60% of this Europe ETF's geographic exposure.
Global X MSCI Greece ETF (GREK)
The Global X MSCI Greece ETF (NYSE: GREK) traded slightly lower, but still managed a new 52-week high and remains one of the best-performing single-country ETFs this year.
Sure, GREK's up 44.20% year to date and that may imply the good times are set to stall, but the opposite may be true.
“Greek equity markets rallied after the market-friendly New Democracy government took over for Alexis Tsipras’ Syriza party, and over the last month yields on short term Greek bonds turned negative, suggesting that investors are becoming increasingly confident in Greece’s prospects,” Global X said in a recent note. “Yet, despite the progress made in Greece thus far, further progress is needed for a full recovery. Ample runway is left for Greek markets to return towards pre-crisis levels – which makes valuations particularly attractive.”
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