Europe Beckons for ETF Investors

The European Central Bank has been implementing a loose monetary policy that dragged yields down to record lows. Consequently, dividend-paying European stocks and related exchange traded funds (ETFs) may strengthen as more investors turn to riskier assets.

Earlier this year, Vanguard unveiled another round of fee cuts and VGK was part of that group. The Europe ETF now charges 0.1% per year, or $10 on a $10,000 investment, down from 0.12% per year.

“We believe that the underlying performance of European equities is potentially misunderstood by market participants,” Henry McVey, head of global macro and asset allocation for private equity powerhouse KKR, said in a lengthy report for clients, reports CNBC. “We also believe that European equities, financials in particular, are poised to perform well in 2017.”

Additionally, market analysts have upwardly revised their projections on Eurozone markets as a weakening euro currency, stronger global demand and steepening yield curve help support revenue growth, potentially signaling a turn in the prolonged earnings recession.

Potential investors, though, should keep an eye on further political risks, such as the U.S. anti-trade policies, Brexit negotiations and elections in Netherlands, France, Germany and Italy

For more information on the European markets, visit our Europe category.