When looking for overseas exposure, investors may want to target Europe and region-specific exchange traded funds.
Portfolio Strategist Andrew Burkly, along with Sam Burns and Scott Davies at Oppenheimer & Co., argue that European markets are among the highest ranked, whereas emerging markets and Asian economies look weaker, reports Dimitra DeFotis for Barron’s.
“Overall, we continue to think Europe is relatively attractive, as the European Central Bank’s ongoing quantitative easing program, the corresponding weaker euro, and positive relative earnings revisions all should support relative stock price performance over the next several months,” according to the Oppenheimer strategists.
Moreover, the firm argues that the Greece troubles have had little impact on the overall picture. Relative revisions have also come off their recent peak but remain well above average, while relative valuations have declined.
For instance, the iShares MSCI EMU ETF (NYSEArca: EZU) and the SPDR EURO STOXX 50 (NYSEArca: FEZ), which both focus on Eurozone countries, show a price-to-earnings ratio of 15.9 and 15.2, respectively, whereas the S&P 500 index has a 18.4 P/E. [Europe Stocks, ETFs Look Cheap]
The euro-currency hedged Deutsche X-trackers MSCI EMU Hedged Equity ETF (NYSEArca: DBEZ) has a 16.7 P/E, iShares Currency Hedged MSCI EMU ETF (NYSEArca: HEZU) has 15.9 P/E and WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) has a 16.9 P/E.
On the other hand, the Oppenheimer warned investors of the deteriorating outlook in the emerging markets.