Attractive Valuations Lurk Among Europe ETFs

Nearly 52% of VGK’s combined weight is allocated to the U.K., Switzerland and Sweden, a steady trio of markets, but none of which are Eurozone nations.

Last week, Stephen Murray, portfolio manager at New Hampshire-based Harvest Capital Management, said in an interview with ETF Trends that his firm wanted to focus on Eurozone equities, so it opted to go with the SPDR EURO STOXX 50 (NYSEArca: FEZ). [Settling the Big Europe ETF Debate]

FEZ, which is heavily allocated to French and German stocks, has sharply outpaced VGK over the past 90 days.

In the event the euro, which has been strong against the dollar this year, declines, investors may also want to consider currency-hedged ETFs such as the db X-Trackers MSCI Europe Hedged Equity Fund (NYSEArca: DBEU) and the WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ).

DBEU is more of the hedged answer to VGK as the former holds stocks of 16 developed Europe nations. That means DBEU also offers a hedge on the British pound and Swiss franc in addition to the euro.

HEDJ, which has slightly trailed VGK this year, has a 0.67% weight to the U.K., but the rest of the fund focuses on the Eurozone with Germany, France and the Netherlands combining for almost two-thirds of HEDJ’s country weight.

HEDJ Country Weights