In a previous blog on European equities, I discussed how the estimated earnings recovery in the European market could make the equities attractively priced compared to the S&P 500 Index.

Specifically, I recommended focusing on European exporters, which may be less reliant on sluggish growth in Europe due to their multinational and diversified global revenue base.

Today I will take a closer look at the performance of these companies, as they are starting to separate themselves from the broader European market averages.

Why Exports Matter

The global economy is improving, but many European economies are struggling. As a result, to avoid becoming overly dependent on a single economy, we believe it is important to invest in companies that have more diversified revenue streams.

With the U.S. equity markets off to a great start year to date, we thought it would be interesting to look at how the European markets are performing. Specifically, to see how European exporters have performed year to date, we compared the WisdomTree Europe Hedged Equity Index to the MSCI EMU Local Currency Index, its market capitalization-weighted benchmark. In its Europe Hedged Equity Index, WisdomTree focuses on European exporters. These companies are selected if they are domiciled in Europe and if more than 50% of their revenues come from outside Europe.

Although there are differences in index methodologies, we chose the MSCI EMU Local Currency Index for comparison purposes because it represents a broad base of European companies, weighted by market capitalization. We looked at the total attribution between the two indexes year-to-date through 04/15/2013.

Total Performance Attribution: WisdomTree Europe Hedged Equity vs MSCI EMU Local Currency

Next page: Performance and sector weights