ETFs offering exposure to Europe on both a multi-country and
country-specific basis have come roaring back over the past several
months. For example, the Vanguard MSCI Europe ETF (NYSE:
) is up 6.8 percent in the past month. The iShares MSCI Italy Index
) has been even more impressive with a gain of 12.1 percent over
the same time.
While the performances of ETFs such as EWI and the iShares Spain
Index Fund (NYSE:
) have been impressive, those gains do not mean risk has been
eliminated from the European investment thesis. Even the European
Central Bank's bond-buying plans do not mean Italy is no longer in
a recession or that Spain's unemployment rate has dipped from the
20 percent area.
In other words, there is still risk when it comes to investing
in Europe, but the region is also still home to a plethora of
quality companies. Acknowledging that, investors should not ignore
Europe outright. Rather, they should demand compensation for taking
on European risk. These high-yielding Europe ETFs deliver that
First Trust STOXX European Select Dividend Index Fund (NYSE:
With average daily volume of just under 15,000 shares, it is not
surprising the First Trust STOXX European Select Dividend Index
Fund leads an anonymous existence. That should not be the case in
an environment that has placed heavy emphasis on high-yield
The 31-stock ETF has a 30-day SEC yield of 6.83 percent,
according to First Trust data
. If there is a strike against FDD, it is not volume, but the ETF's
almost 38 percent allocation to financial services names. On the
bright side, more than half of the fund's weight is allocated to
non-Eurozone countries with the U.K. and Switzerland combining for
50 percent of FDD's total country weight.
FDD, which charges 0.6 percent per year, has surged 6.6 percent
in the past month.
WisdomTree Europe Hedged Equity Fund (NYSE:
FDD and the WisdomTree Europe Hedged Equity Fund
make for an interesting Europe ETF rivalry
, though HEDJ goes about its business in far different fashion.
For starters, HEDJ is looking to capitalize on the rising
ETFs that either exclude financials
or offer reduced exposure to the sector. The new version of HEDJ
features an 8.25 percent weight to that group, making it just the
seventh-largest sector allocation in the fund.
Additionally, HEDJ focuses on European dividend-paying firms
that generate the bulk of their revenues outside of the Eurozone.
HEDJ in its new form (the ETF formerly featured exposure to
countries outside of Europe) does not have a lengthy operating
history. However, the ETF has gained 3.8 percent since the start of
September and has a 30-day SEC yield of 3.5 percent.
SPDR EURO STOXX 50 ETF (NYSE:
With over $1 billion in assets under management, FEZ is far
larger than FDD and HEDJ. FEZ also sports a beta of 1.31 against
the S&P 500, indicating that this ETF may not be the best
choice for ultra-conservative investors.
The elevated beta, can in part be attributed to the ETF's almost
24 percent weight to bank stocks. Along those lines, it should be
noted just one bank, Banco Santander (NYSE:
), is found among the fund's top-10 holdings.
FEZ offers exposure to eight European nations, but the fund is
not diverse at the country level as France and Germany combine for
almost 69 percent of the fund's weight. The ETF also sports some
attractive statistics including a four percent dividend yield, an
expense ratio of 0.29 percent, a forward price-to-earnings ratio
below 11 and a price-to-book ratio of just 1.1.
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