Data released this month showed that the Eurozone has grown
for the first time since the third quarter of 2011. GDP for the
17-nation economic union increased by 0.3%, according to data
released this month. This marks an end to the recession plaguing
the region, which had suffered a 0.3% decline even in the first
quarter of 2013.
Positive GDP Data
The resurgence was led by the two largest economies of the
continent, Germany and France. Germany grew by 0.7% in the second
quarter, the same as the rate in the first quarter of 2012. The
British economy grew at the same rate, maintaining the rate
achieved in the third quarter of 2012.
France grew by 0.5%, ending the recessionary conditions
prevailing in that country. Recessionary conditions have also
eased for the economies of Italy and Spain, who are third and
fourth in terms of size.
According to London-based financial data company Markit, the
services index for the region increased from 49.8 in July to 51
in August. The manufacturing index increased from 50.3 to 51.3.
The monthly composite PMI, which is an indicator for both
services and manufacturing increased from 50.5 to 51.7.
Additionally, consumer confidence has also increased this
month, to the highest level in more than two years. According to
the European Commission, consumer confidence for the Eurozone
nations increased from -17.4 to -15.6. The index has now
increased successively over a period of nine months.
The Rise of Emerging Markets
Data released by index provider MSCI shows that indices in
Central and Eastern Europe have risen by 1.2% in the last three
months. This is especially significant, considering that emerging
markets as a whole have slumped by nearly 7.5%. Excluding Russian
companies, which have been hit by plummeting commodity prices,
markets in these regions have gained 2.3%.
Macroeconomic indicators support these developments. Hungary's
trade surplus has increased by 6 billion euros from the year-ago
period. Poland's retail sales have grown by 4.3% for July,
compared to the same month last year. Additionally the Czech
economy has emerged from a recession, growing by 0.7% from the
Mutual Fund Picks
Vanguard European Stock Index
Launched in June 1990, this is the largest of our choices with
net assets of $11.67 billion. It also has a relatively high
minimum initial investment requirement, of $3,000. This is an
index fund which tracks the FTSE Developed Europe Index. The
index primarily consists of stocks issued by companies from the
U.K., France, Germany and Switzerland.
The mutual fund holds 508 securities in all. It is widely
diversified and its top 10 holdings make only 19.47% of its
assets. Its top 3 holdings include Nestle SA,
HSBC Holdings plc
) and Roche Holding AG. The fund returned 27.08% over the last
one year period and has a Zacks Rank #1(Strong Buy).
T. Rowe Price European Stock
With net assets amounting to $885.95 million, the fund was
also founded in 1990. This fund focussing on investing in
European companies regardless of their size. It has a higher
minimum initial requirement of $2,500.
This fund holds a total of 76 securities. Its top 10 holdings
account for 20.41% of its assets. Its top three assets are
Royal Dutch Shell PLC
Anheuser-Busch InBev SA/NV
). The fund returned 33.56% over the last one year period and has
a Zacks Rank #1 (Strong Buy).
Henderson European Focus A
The youngest of our picks, launched in August 2001, this is
also relatively smaller in terms of assets. Total assets of the
fund amount to $703.25 million. The fund focuses on investing in
equity securities of European companies. It may concentrate it
assets in a single or small number of countries and has a minimum
initial requirement of $500.
The fund has a total number of 65 assets. The asset it is most
invested in is European Aeronautic Defence and Space Co NV, which
makes up 4.63% of its assets. The next two, Kinnevik, Investment
AB and Accor SA together make up 7.50% of its assets. The fund
returned 32.19% over the last one year period and has a Zacks
Rank #1 (Strong Buy).
Europe seems to be on a firmer footing now on the economic
front. Moreover, its emerging economies hold promise. These
mutual funds will therefore make excellent additions to your
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