Europe ETFs Pause, but Upside Remains

“At WisdomTree, we believe that small caps have the potential to offer an interesting complement to many existing regional equity allocations – a phenomenon that is especially true for Europe today,” write Jeremy Schwartz, WisdomTree Director of Research, and Christopher Gannatti, WisdomTree Associate Director of Research.

DFE is conservatively positioned as 48% of its combined weight is allocated to the U.K., Sweden and Switzerland. That ETF and funds such as EZU stand to benefit from the European Central Bank’s efforts to jump-start economic growth.

“As the Federal Reserve scales back its easy money program here in the U.S., the European Central Bank (ECB) is holding its key interest rate steady at 0.25% as the recovery strengthens. The market generally expects the ECB to keep its rates low for longer, as deflation remains a concern in the area. The countries hit hardest by the debt crisis still have much progress to make before returning to normal, and a low-for-longer rate stance by the ECB makes European equities especially attractive at this time,” said Kittsley.

EZU is levered to a cyclical recovery in Europe as almost 27% of its allocated to industrial and consumer discretionary names. Those sectors combine for over 42% of DFE. [Great Diversified Europe ETFs]


Tom Lydon’s clients own shares of EEM.