EUFN: A Rising Star Among European Bank ETFs

Related: Drawbacks Linger for Bank ETFs Despite Rally Mode

The $1.21 billion EUFN tracks the MSCI Europe Financials Index and holds 84 stocks. The U.K., Switzerland and Sweden combine for about 48% of the ETF’s weight, underscoring the point that this is not a dedicated Eurozone ETF. Spain and Italy combine for 17% of EUFN’s roster.

European economies are expected to enjoy earnings growth in the year ahead from cyclical sectors that benefit from improved global growth and a weakening euro currency. Europe will likely benefit from increased trade as the U.S. led bout of reflation helps bolster stronger growth outlooks globally.

“While lenders globally benefited from speculation of higher interest rates, the Euro Stoxx Banks Index got an additional boost in the past month from receding concern about lender stability after Banco Santander said it will take over Banco Popular Espanol, Italy committed to clean up two failed banks in its biggest rescue on record and the European Union formally approved state aid for Banca Monte dei Paschi di Siena,” according to Bloomberg.

Investors can play a possible pullback in in EUFN and European banking names with the new Direxion Daily European Financials Bear 1X Shares (NYSEARCA:EUFS), which debuted in August. EUFS is an inverse though not leveraged ETF.

For more information on the financial sector, visit our financial category.