Like many diversified Europe ETFs, ADRU is heavily allocated to the U.K. and Switzerland, a trait that has been favored by conservative investors seeking European equity exposure. The downside of the combined 58% weight to the U.K. and Switzerland is that ADRU’s correlation to a weaker euro could be reduced and the ETF is heavily exposed to the strong British pound and Swiss Franc.
The upside is British and Swiss equities have been solid performers this year. Additionally, ADRU offers positive leverage to recovering European dividend growth. Remember, European payouts need to grow almost 40% just to get back to pre-financial crisis levels. [European Dividend Opportunity]
PowerShares BLDRS Europe 100 ADR Index Fund
ETF Trends editorial team contributed to this post.