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Europe ETFs in the Spotlight as Business Growth Speeds Up

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The Euro zone business activity has expanded at its quickest clip in 15 years in June, according to preliminary data released recently, as quoted on CNBC. The 19 economies have recently resorted to various steps to reopen as the vaccination programs pick up. More tourists are now being welcomed into the region.

IHS Markit’s flash composite PMI for the Euro zone, which tracks activity across both manufacturing and services, touched 59.2 in June versus 57.1 in May. The latest reading has been the highest in 15 years. The economy has also been witnessing steady job growth. Also, new orders placed with manufacturers recorded one of the fastest rises since the pandemic hit in 2020.

Not only this, Credit Suisse recently upgraded continental European equities to overweight and forecast the group to be a good long-term bet, due to economic recovery, valuations and excess liquidity, as quoted on Reuters.

"European GDP is 5.5% below previous peak, the U.S. is back to previous peak and we now see a potential catch-up in Europe on the basis of the vaccine roll-out (possibly 70% of the adult population by early September), the fiscal boost (2% of GDP) and excess savings (4.5% of GDP)," Andrew Garthwaite said in a note to clients, as quoted on Reuters.

The European Central Bank recently estimated that the Euro zone would expand at a rate of 4.6% this year and 4.7% next year — a better outlook from its March assessment. The French economy shows more promise as the flash France composite output index came in at 57.1 in June compared with 57.0 in May, marking an 11-month high. Meanwhile, the flash Germany PMI composite output index increased to 60.4 in June from 56.2 in May — hitting a 123-month high.

Against this backdrop, below we highlight a few Europe ETFs that are enjoying high momentum and have been rising strongly in the past month.

ETFs in Focus

iShares MSCI Russia ETF (ERUS - Free Report) ) – Up 5.6%

The underlying MSCI Russia 25 / 50 Index free-float adjusted market-capitalization weighted and designed to measure the performance of equity securities in the top 85% by market capitalization of equity securities listed on stock exchanges in Russia. The fund has a Zacks Rank #2 (Buy).

iShares MSCI Switzerland ETF (EWL - Free Report) ) – Up 3.0%

The underlying MSCI Switzerland 25/50 Index consists of stocks traded primarily on the Zurich Stock Exchange. The underlying Index is free-float adjusted, market-capitalization weighted. The fund has a Zacks Rank #3 (Hold).

Xtrackers MSCI Europe Hedged Equity ETF (DBEU - Free Report) ) – Up 2.4%

The underlying MSCI Europe US Dollar Hedged Index provides exposure to equity securities in developed stock markets in Europe, while at the same time mitigating exposure to fluctuations between the value of the U.S. dollar and selected non-U.S. currencies.  The fund has a Zacks Rank #3.

Franklin FTSE Europe Hedged ETF (FLEH - Free Report) ) – Up 2.1%

The underlying FTSE Developed Europe RIC Capped Hedged Index is a market-capitalization weighted index, representing the performance of large and mid-capitalization stocks domiciled in European countries classified as Developed. The fund has a Zacks Rank #3.

iShares Currency Hedged MSCI Eurozone ETF (HEZU - Free Report) ) – Up 2%

The underlying MSCI EMU 100% USD Hedged Index is an equity benchmark for the European Monetary Union countries with the currency risk of the securities included in the Underlying index hedged against the U.S. dollar on a monthly basis. The fund has a Zacks Rank #3.

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