Investors have looked at the relatively cheap Europe-related exchange traded funds as an attractive international play. However, economic and geopolitical problems are dragging down Eurozone stocks.

Year-to-date, the iShares MSCI EMU ETF (NYSEArca: EZU) declined 3.7% and the SPDR EURO STOXX 50 (NYSEArca: FEZ) fell 3.1%. Both ETFs focus on Eurozone countries, whereas other broad Europe ETFs include exposure to the U.K. and Switzerland. In comparison, the S&P 500 is up 5.8% so far this year.

EZU shows a price-to-earnings ratio of 15.6 and a price-to-book of 1.4. FEZ has a P/E of 14.9 and a P/B of 1.3. Meanwhile, the S&P 500 shows a P/E of 17 and a P/B of 2.4.

“Europe is considerably cheaper than the U.S.,” Mike Schoenhaut, portfolio manager of the J.P. Morgan Income Builder Fund, said in a Wall Street Journal report. “That may create some opportunities, but we don’t really see a near-term catalyst for major European outperformance until later this year.”

Eurozone stocks strengthened earlier this year as an improving economy and the European Central Bank’s loose monetary policy helped support the markets. However, the outlook has soured after Italy shifted back into a recession, Germany’s economy slowed down and escalating tensions between Ukraine and Russia all fueled uncertainty. [Germany, France ETFs Fall Into A Market Correction]

“The outlook has really deteriorated from very bright to very uncertain,” Geoffrey Pazzanese, senior portfolio manager of the Federated InterContinental and Emerging Markets Equity funds, said in the article.

Schoenhaut is concerned about outlook of the region due to the weak economic data in Europe and tensions in Ukraine, notably Germany since the country’s export industry is vulnerable to sanctions. [Stagnate Growth Has Europe ETFs Lagging]

“The back and forth sanctions between European markets and Russia really, I think, have a much greater impact on Germany,” Schoenhaut said in the article. “We just don’t view this as the time to be taking big risks in Europe.”

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