Not all diversified Europe ETFs are dedicated to the Eurozone, a trait investors should be aware of at a time when many market observers are bullish on Eurozone equities and the region’s economic recovery.

While many diversified Europe ETFs are heavily allocated to Germany and France, the Eurozone’s two largest economies, these funds also feature significant exposure to the U.K. and Switzerland as well as exposure to some Nordic countries. However, the X-trackers MSCI EMU Hedged Equity ETF (NYSEArca: DBEZ) is a dedicated Eurozone play.

DBEZ “seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI EMU IMI U.S. Dollar Hedged Index. DBEZ offers investors purer access to Eurozone equities while seeking to mitigate exposure to currency fluctuations between the U.S. dollar and the euro,” according to DWS.

European Equities Still Attractively Priced

Despite the recent rally in European equities, valuations still look attractive relative to domestic stocks. On a forward earnings basis, European stocks have gotten cheaper continually since 2015, and price-to-book value for the region shows European names trading at a multi-year discount to the U.S.

“We moved to an overweight position on Germany given the record levels of exports that the German economy is currently producing, coupled with a still relatively attractive valuation to the U.S.,” said DWS in a recent note.

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