Capitalize on European Rate Cuts With TOUS | ETF Trends

Now may be a good time to jump into European equities.

In the first instance since 2019, the European Central Bank has made the call to cut three of its interest rates by 0.25%. This decision came even amid concerns that inflation in the area will stay above 2% until later next year.

“We are determined to ensure that inflation returns to our two percent medium-term target in a timely manner. We will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim,” added ECB President Christina Lagarde.

With the ECB resolving to dial back interest rates, savvy investors may wish to capitalize on European equities. The T. Rowe Price International Equity ETF (TOUS) can provide investors with quality exposure to foreign markets.

TOUS aims to provide long-term capital growth by investing in a diverse list of international securities. This includes companies outside the U.S. and Canadian regions with strong valuation, potential growth, and good returns.

More Than Just European Exposure

TOUS isn’t solely focused on investing in European assets. However, the fund’s portfolio includes a strong percentage of European Union-based companies. As of 4/30/2024, two of the top three countries TOUS was geographically exposed to were the United Kingdom and France.

Some exposure diversified away from Europe can also work to the fund’s benefit. With Japan remaining the top country TOUS is exposed to, the fund can remain resolute regardless of where the ECB decides to take rates.

T. Rowe Price’s history of active management can benefit the fund offensively and defensively. With an active management strategy, TOUS can pivot assets in and out of Europe depending on where the market is positioned. This can prove immensely beneficial to investors wanting to take advantage of ECB rate cuts but remain wary of where Europe’s inflation fight stands.

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