Can The Higher Trend Continue For European ETFs?

Over the past three months, EWK has seen a solid gain of 4.9%. Most of the gains were in the past month though as the trailing 30 days saw gains of 5.9%.

iShares MSCI Austria Capped ETF (EWO)

Another overlooked market, though one that has significant Eastern European exposure, is Austria. Investors can target this nation with EWO, a product that has about 27 stocks in its basket, and charges investors 50 basis points a year in fees (see 3 Forgotten Ways to Play Europe with ETFs).

Large caps make up just under two-thirds of the assets, while sectors are focused on financials, industrials and energy. Like other funds on the list, EWO is a bit concentrated with Erste Group and OMV combining to make up nearly one-fourth of the portfolio.

Over the past three months, this Austrian ETF has added 2.7%, a respectable figure. However, the gains in the past month have been especially solid, as these come in at 8.7%.

iShares MSCI Spain Capped ETF (EWP)

The best performer on this list comes to us from Spain. The country can be targeted with EWP, an ETF that holds two dozen Spanish companies, charging investors 50 basis points a year for the exposure.

Large caps make up about 75% of the assets in this product, but the real item to note is that financials make up 44% of assets, including two of the top three holdings. These high beta securities are likely what helped EWP outperform lately, and especially thanks to Banco Santander and BBVA which, along with Telefonica, account for 44.7% of assets on their own.

EWP has been a solid performer in the trailing three month time frame, adding about 4.8% in the period. The real surge has taken place in the past four weeks though, as in this time period, EWP has moved higher by 9.9%.

Bottom Line

Despite some sluggish trading earlier in the year, European markets have come back strong in recent weeks. Funds tracking these nations have outperformed many other developed market counterparts as a firmer euro and a return to growth have rekindled investor interest in the region (see High Dividend ETFs to Buy Even If the Fed Tapers).

Whether this trend can continue over the long haul is another question, as all the nations highlighted have some structural issues that they still need to work out, so these might not be the best picks for long term investors.

Still, if current trends can remain in place,  these four may continue to see a solid bounce back to close out the summer, especially if optimism continues over the new European growth story.

This article is brought to you courtesy of Eric Dutram.

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *