Investing in overseas focused exchange traded funds (ETFs) has been a sure bet the last few years, and many bet this year will outperform just as well. With the uncertainty of the U.S. interest rate outlook, a more conservative investor may want to take money out of emerging markets, which can be volatile, and look into Europe. Sam Patel of TheStreet.com writes that while emerging markets outperformed the European markets last year, on average, they may be in line for a correction.
Emerging markets have good fundamentals like solid economic growth, and low inflation but are vulnerable to investor sentiment. The Chinese government even stopped new domestic equity funds from launching in concern of the stock market overheating. The European markets aren’t as sensitive to interest rates and this reason is why insiders think moving money from emerging markets into Europe may reduce risk.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.