While markets are suffering today after poor ISM data on Tuesday, the third quarter culminated with stocks closing at their highest levels historically. Stocks rose on Monday amid optimism around U.S.-China trade talks as Wall Street wrapped up a volatile third quarter.
The enthusiasm spread to European markets as well, where European stocks ended the quarter Monday with a mild gain, capping three months of turmoil on the political and economic front. This strength was displayed despite the fact that European stocks are much cheaper than their U.S. counterparts, reflecting worries about the area’s low growth. According to J.P. Morgan data, the Euro Stoxx 50 has a price-to-earnings ratio of 14.6, compared to 18.1 times for S&P 500 components.
For investors looking for a way to participate in the European equity market using ETFs, the WisdomTree Europe Hedged Equity Fund (HEDJ) seeks to provide exposure to the European equity market while hedging exposure to fluctuations between the U.S. dollar and the euro.
The WisdomTree Europe Hedged Equity Fund has a number o benefits to potential investors, including the ability to gain exposure to broad Eurozone equity from dividend paying companies with an exporter tilt, act as currency hedge mitigates exposure to fluctuations of the euro, and maintain Eurozone equity exposure while neutralizing currency movements of the euro relative to the U.S. dollar. YTD the fund is up almost 20%, with an expense ratio of 0.58%
“The markets may be a little more volatile, but that doesn’t change the appetite for companies operating on strong fundamentals in China that are considering IPOs,” said Alex Abagian, Co-Head of Asia Pacific ECM at Morgan Stanley.
“These are good assets, though maybe they will have to be a little more sensitive about price and valuation considering the extra market volatility,” he said.
“I feel constructive about the rest of the year. We have already had some names re-open the market post-summer and there is a functioning market for growth stories of size,” said James Fleming, co-head of ECM for Europe, Middle and Africa at Citi.
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