A risk-on sentiment appears to be creeping back into the European capital markets. ETF investors looking to get international diversification via Europe, may wish to examine the iShares Core MSCI Europe ETF (IEUR) and the iShares Europe ETF (IEV).
Both funds will give investors broad European exposure:
IEUR seeks to track the investment results of the MSCI Europe IMI. The fund generally will invest at least 90% of its assets in the component securities of the underlying index and in investments that have economic characteristics that are substantially identical to the component securities of the underlying index. The index is a free float-adjusted market capitalization-weighted index which consists of securities from the following 15 developed market countries or regions: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Meanwhile, IEV seeks to track the investment results of the S&P Europe 350TM, which measures the performance of the stocks of leading companies in the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The fund generally invests at least 90% of its assets in securities of the index and in depositary receipts representing securities of the index. It may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the index.
“European markets are gradually gaining ground, with vaccine hopes being counteracted by US stimulus and lockdown fears,” said Joshua Mahony, Senior Market Analyst at IG. “Meanwhile, the October UK retail sales figure helps alleviate some of the anxiety ahead of a crucial period for retailers. Tentative European gains this morning appear to maintain the ongoing consolidation phase, as markets tread water in the wake of the vaccine boost seen over the past two Mondays.”
One of the enduring themes will be the continued response to the COVID-19 pandemic with stimulus measures implemented by the government.
“Stimulus remains a significant theme for markets, with the continued failings at Congress now accompanied by a move from the US Treasury to withdraw the CARES act despite Fed extension requests,” Mahony said. “With the Fed seeking a 90-day extension to the four emergency lending programmes currently in place, Steven Mnuchin’s rejection highlights an end to the kind of support needed to stave off a deeper economic collapse. Quite what kind of impact this will have upon the economy remains to be seen, but it certainly does add an element of uncertainty that is unlikely to benefit equity valuations.”
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