Europe’s economy has gained traction, thanks to strong economic data and upbeat job additions in February. Moreover, easing concerns over the possibility of the Netherlands and France exiting the Euro zone, have also raised optimism over the region.

Banking on such positive trends, the addition of mutual funds having a significant exposure to European securities could prove to be lucrative. Now let us take a look at some of the encouraging data that have raised hopes of economic growth in Europe.

Dutch and French Election Scenario

According to the Dutch Electoral Council, Prime Minister Mark Rutte’s party, People’s Party for Freedom and Democracy (VVD) won the parliamentary election by securing 33 seats in the House of Representatives. Party of Freedom (PVV) – VVD’s closest competitor led by Geert Wilders – secured around 20 seats. This election result boosted sentiments, as Wilders had called for a Dutch referendum to leave the European Union (EU), which was expected to bring back uncertainty in the EU after “Brexit.”

In France, as per a recent poll, former banker and economy minister, Emmanuel Macron is leading the presidential race with 29% votes, way ahead of his immediate rival Marine Le Pen. National Front party leader, Le Pen held 19% of votes. With voters’ sentiments moving toward Macron ahead of the much-awaited French presidential election, starting April 23, expectations of a free-trade economy and lower corporate and housing taxes are rising. Moreover, fears of France’s exit from the EU have subdued with Le Pen’s victory appearing unlikely.

Eurozone Economy Continues To Expand

The Eurozone economy increased for the second consecutive month this year. According to IHS Markit Economics, GDP in the region increased from 54.4 in January to 56.0 in February, marking the best reading since April 2011. Moreover, it also indicated a rise of 0.6% in GDP for the first quarter of 2017. Strong job growth contributed to this economic betterment in the EU. Job additions in the services sector posted the best growth in nearly 10 years and reached its best level in manufacturing sector in six years.

Additionally, the European Commission raised its growth forecast for the broader European Union (EU). The European Commission now expects the EU to grow 1.8% in 2017, surpassing its previous estimate of 1.6%. This came as a breather to investors as markets were weighed down by concerns over the nature of Trump's likely economic policies and Britain's decision to leave the EU.

Buy These 3 European Mutual Funds

Encouraging election results and polls, and upbeat economic reports clearly indicate that Europe’s economy is stabilizing. Moreover, the Stoxx Europe 600 Index gained 4.3% and 0.7% over the last three months and one month, respectively.

Additionally, mutual funds related to the European equity market registered strong returns. According to Morningstar, the region’s equity mutual funds posted three-month, year-to-date (YTD) and one-year returns of 7.1%, 5.9% and 7.9%, respectively. This is far superior to the performance of the other international equity funds.

This upbeat backdrop calls for investing in three European mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have impressive three-month and year-to-date (YTD) returns. They also have minimum initial investment within $5000 and low expense ratios.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

Invesco European Small Company A (ESMAX - Free Report) seeks appreciation of capital for the long run. ESMAX invests the lion’s share of its assets in equity securities of small-cap European companies. Small-cap companies are those whose market-cap is similar to companies included on the Russell 2000 Index.

The fund has three-month and YTD returns of 10.8% and 8.7%, respectively, and an expense ratio of 1.40% as compared to the category average of 1.44%. ESMAX has a Zacks Mutual Fund Rank #2.

JPMorgan Intrepid European A(VEUAX - Free Report) seeks capital appreciation for the long run. VEUAX invests a bulk of its assets in equity securities of companies which are primarily based in Western Europe. The fund may try to manage its cash flows effectively by utilizing exchange-traded futures.

The fund has three-month and YTD returns of 8.2% and 7.3%, respectively, an expense ratio of 1.42% as compared to the category average of 1.44%. VEUAX has a Zacks Mutual Fund Rank #2.

Franklin Mutual European Z (MEURX - Free Report) seeks growth of capital and income. MEURX invests the majority of its assets in equity securities of European companies that are expected to be undervalued. The fund normally invests in more than five different countries, but sometimes may place all its assets in a single nation. It may also invest around one-fifth of its assets in companies located in the Middle-East and the U.S.

The fund has three-month and YTD returns of 2.7% and 2.1%, respectively, and an expense ratio of 1.06% as compared to the category average of 1.44%. MEURX has a Zacks Mutual Fund Rank #1.