FEP also gives investors a lot of what they are looking for with diversified Europe ETFs. That is a more conservative posture without being completely excluded from equity market recoveries in more controversial countries such as the PIIGS. Almost 48% of FEP’s weight is allocated to France, the U.K. and Germany.
Throw in a 15.1% combined weight to three Nordic countries and it is clear FEP errs on the side of caution. However, FEP is not a “boring” Europe ETF because it does offer some leverage to the low valuations and possible bounces in PIIGS markets Italy, Spain and Greece. Those countries combine 18% of the fund’s weight.
FEP is up 27.4% in the past year, a performance that compares favorably with some of its larger rivals and the ETF could build on that momentum in 2014 due to its attractive sector mix.
Financial services, one of the sectors analysts tracking European stocks are most bullish on, lead FEP with a weight of 22%. Additionally, FEP is intimately levered to a recovery in Europe’s domestic and export economies with a combined 35% weight to consumer discretionary and industrial names. Although FEP is not a currency hedged ETF, its weights to those two sectors indicate the fund could benefit from some retrenchment in the euro, a currency some strategists view as overvalued. [Time to Make a Deposit With European Banks]
First Trust Europe AlphaDEX Fund
ETF Trends editorial team contributed to this post.