While the rest of the world is scrambling to implement the final touches on stimulus packages, if they haven’t done so already, the Eurozone is still trying to get some consensus among its members. The rift recently caused Italian bonds to spike during Tuesday’s trading session.
Per a Wall Street Journal report, “Italy’s benchmark 10-year government bond yield rose to 1.800% Tuesday—its highest since March 19—from 1.604% on Thursday, as investors moved to assets they consider to be less risky. Yields on similar German bonds fell. A widening gap between Italian and German yields is a measure of financial stress in the eurozone. That gap, around two percentage points on Tuesday, was near its widest end-of-day level since March 18, according to FactSet. Yields move in the opposite direction of bond prices.”
“The Eurogroup agreement wasn’t the big bazooka that some people wanted,” he said. “You can see that in the bond market.”
In the meantime, here are a few Europe-focused ETFs to watch as the drama unfolds:
- 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 fund will invest at least 80% of its total assets (but typically far more) in component securities (including depositary receipts in respect of such securities) of 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 (the “EMU” or “Eurozone”) of the European Union (“EU”).
- 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. It will invest at least 80% of its total assets in component securities of the underlying index.
- 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. It will invest at least 80% of its total assets in component securities of the underlying index.
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