3 Europe ETFs For The ECB Meeting

3 Europe ETFs For The ECB Meeting

European stocks and the related exchange-traded funds haven't been all that bad this year, but when measuring against their U.S. counterparts, the picture grows murkier. Year-to-date, the iShares MSCI Eurozone ETF (CBOE: EZU) is up 14.4%, trailing the S&P 500 by nearly 700 basis points.

Eurozone stocks can take some steps toward shedding their laggard status today on the back of the European Central Bank meeting.

The ECB cut the interest rate on deposits by 10 basis points to 0.5% Thursday and said it would relaunch quantitative easing. 

The risk is that banks in the region will be pinched, a consideration for investors because many eurozone ETFs are heavy on the financial services sector.

“While the ECB’s strategy is to boost growth and inflation by lowering borrowing costs for companies and households, squeezing banks too much could hamper their ability to supply the credit that fuels the economy,” according to Bloomberg.

In addition to the aforementioned EZU, here are some Europe ETFs to consider today and over the remainder of 2019.

WisdomTree Europe Hedged Equity Fund

The WisdomTree Europe Hedged Equity Fund HEDJ accomplishes two primary goals. First, it exploits a weakness in the euro via its currency hedge. Second, its financial services weight is just 11.73%, making that sector merely the fifth-largest in the fund. Additionally, HEDJ is proof positive that there are opportunities in eurozone stocks as this WisdomTree has performed inline with the S&P 500 this year.

“It took less than a generation to balloon the ECB’s balance sheet from below 1 trillion euros to 4.69 trillion euros ($5.19 trillion) via bond purchases. How big of a dent can the ECB make in equities? This isn’t the $24-trillion S&P 500; the MSCI EMU Index is worth only 3.77 trillion euros ($4.18 trillion),” according to WisdomTree.


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