The fund has seen strong inflows recently with $1.4 billion moving in since the end of June 2012, according to IndexUniverse data.
“The fund’s exclusion of the U.K. and Switzerland leaves out nearly half of the total stock market capitalization of developed Europe and magnifies its exposure to the weakest members of the Eurozone, including Italy and Spain,” notes Morningstar’s Bryan. “While this narrower profile can offer greater upside in a recovery, it also exposes investors to greater risk. Europe has a long way to go to resolve structural imbalances and establish a sustainable growth trajectory.”
In currency markets, CurrencyShares Euro Trust (NYSEArca: FXE) rose Thursday after the European Central Bank kept interest rates unchanged. [Euro ETF Jumps After ECB Stands Pat on Rates]
The chart below shows the relative performance of EZU versus the S&P 500 ETF. When the chart is rising, Europe is outperforming the U.S.
Full disclosure: Tom Lydon’s clients own EZU.