Challenges remain for the rest of the world, including the Eurozone, as more economies look to transition back to normalcy following the Covid-19 pandemic. Nonetheless, patient investors can take advantage of Eurozone-focused exchange-traded funds (ETFs) as economic events unfold.

While the long-term risks associated with Eurozone shares remain, companies in the region are likely to be among the biggest beneficiaries of an improved global economy, according to Paul Parascandalo, multi-asset fund manager at Aviva Investors.

“Full economic recovery in Europe may still be some way off but continued central bank support and a breakthrough in fiscal collaboration, with the European recovery fund, have helped to reassure investors,” said Paul Parascandalo, multi-asset fund manager at Aviva Investors. “With large short/underweight positions being covered in recent months, positioning now appears to be reasonably neutral. Second quarter earnings announcements provided some very positive surprises and valuations look attractive, particularly vs US equities. Euro strength and the challenges faced by the banking sector may be important factors in determining near term performance but, over a slightly longer horizon, European Equities should be a major beneficiary in a global cyclical recovery.”

^SPEZBMI Chart

^SPEZBMI data by YCharts

In the meantime, here are a few Europe-focused ETFs to watch as the drama unfolds:

  1. Xtrackers Eurozone Equity ETF (EURZ): seeks investment results that correspond generally to the performance, before fees and expenses, of the NASDAQ Eurozone Large Mid Cap Index (the “underlying index”). The underlying index is designed to track the performance of equity securities of large- and mid-capitalization companies based in the countries in the Economic and Monetary Union of the European Union (“EU”).
  2. Xtrackers MSCI Europe Hedged Equity ETF (DBEU): seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI Europe US Dollar Hedged Index. The fund, using a “passive” or indexing investment approach, seeks investment results that correspond generally to the performance, of the underlying index, which is designed to track the performance of the developed markets in Europe, while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries included in the underlying index.
  3. Xtrackers MSCI Eurozone Hedged Equity ETF (DBEZ): seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI EMU IMI US Dollar Hedged Index. The fund, using a “passive” or indexing investment approach, seeks investment results that correspond generally to the performance, of the underlying index, which is designed to track the performance of equity securities based in the countries in the European Monetary Union, while seeking to mitigate exposure to fluctuations between the value of the U.S. dollar and the euro.

For more market trends, visit ETF Trends.