Following a rough start to 2025, the S&P 500 has posted a YTD gain of about 9.4%. It’s still being trounced by an array of European equity ETFs.
Resurgence of European stocks in 2025 was helped by the stellar showings delivered by the industrial and financial services sectors. However, allocations to those groups are not uniform across the Europe ETF landscape. Investors should do due diligence if they want significant exposure to those sectors via the convenience of a single ETF
Enter the WisdomTree European Opportunities Fund (OPPE). Previously known as the WisdomTree Europe Hedged SmallCap Equity Fund, the issuer converted OPPE to its current form in early June. That conversion may bear fruit going forward. That’s because OPPE now devotes about 55.60% of its roster to European industrial and financial stocks.
OPPE Right for These Times
Pledges from European nations to boost defense spending spurred on the region’s equity bourses this year.
“Europe’s real defense spending from 2014 to 2024 increased annually by 3.9% in real terms and European defense stocks have repeatedly hit records in 2025,” according to Goldman Sachs. “And at the 2025 NATO Summit in The Hague, Allies committed to invest 5% of their gross domestic product (GDP) annually on core defense requirements and defense- and security-related spending by 2035.”
Furthering the allure OPPE’s 28% weight to industrial stocks are at least two factors, one with long-term implications. First, European Union (EU) nations are coming off years of under-investment regarding defense spending. That implies there’s a long runway for those countries to elevate defense expenditures. Second, Russia remains the primary geopolitical threat to its European neighbors. That status is unlikely to change over the near term. And that indicates EU countries have no choice but to prioritize defense spending. That could be to the benefit of some of OPPE’s industrial holdings.
Regarding OPPE’s 27.54% weight to financial services stocks, that’s a point of attraction at a time when European bank stocks are coming off their best first-half showing since 1997. The good news for investors considering OPPE is that European financial stocks may have more fuel left in their tanks.
Sector Likely to Ride Crest of the Wave
“Looking ahead, some analysts are bullish about the sector’s ability to ride the crest of a wave despite macroeconomic uncertainty and trade-related risks. KBW’s Andrew Stimpson says the prospect of continued outperformance is founded on a much improved earnings profile and valuation multiples that remain below long-term norms,” according to Bloomberg.
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