Europe, Japan ETFs for Diversification | ETF Trends

With the U.S. equities market expected to slow down this year, exchange traded fund investors may want to look to overseas markets, like the Eurozone or Japan.

Citi strategists downgraded U.S. equities Tuesday, citing potential negative impact of Federal Reserve interest rate hikes and stalling corporate profitability, reports Matt Clinch for CNBC.

“Fading EPS momentum and rising Fed funds mean that, after six consecutive years of outperformance, we cut the U.S. to underweight,” Citi said in a note.

Meanwhile, Deutsche Bank economists cut U.S. economic growth forecasts Tuesday due to recent disappointing data on trade, construction spending and manufacturing activity, reports Richard Leong for Reuters.

Consequently, investors may do better broadening their investment horizons with overseas exposure.

“Decent EPS momentum and continued central bank support mean that we prefer Europe, excluding U.K., and Japan equities,” Citi also said in the note.