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World Cup Fever to Bring Huge Gains for Europe: 3 Fund Picks


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The 2018 FIFA World Cup in Russia is just around the corner. The month-long mega football event is highly anticipated to give the European economy a shot in the arm. Revenue generation from the mega event is expected to benefit host Russia and eventually entire Europe.

Moreover, although revenue generation in the U.K. will not come directly from the FIFA World Cup, British entertainment companies, retailers, and restaurant chains are poised to gain from the event. Following these developments, investing in mutual funds that have significant exposure in European companies looks like a prudent investment option.

FIFA World Cup: Boon for Russia's Economy

Per a report by Reuters, the Central Bank of Russia remained affirmative that during the World Cup and following the event, there will be an increase in demand for both consumer services and products and steady job additions. The World Cup is expected to offer the much-needed boost to the Russian economy, which has been faltering for the past two years.

According to consultancy services firm McKinsey, the mega football event will generate about $15 billion for Russia's economy. Per McKinsey, the effect of the 2018 World Cup will surpass, "the impact of similar championships in Brazil, South Africa, Germany and South Korea," and will remain the only second "to the result of Japan."

FIFA World Cup to Bring Billions for U.K.

Per data from British think-tank, World Advertising Research Center, the World Cup will bring £1.33 billion or around $1.78 billion for the U.K. economy. According to U.K.-based digital marketplace VoucherCodes, the British hospitality sector is expected to make £193 million or $258 million.

Additionally, revenues from barbecues and garden parties are estimated at around £37 million or more than $49 million. Further, expenditure on sportswear items including team jerseys will be around £264 million or about $353 million.

Moreover, football fans, who will watch the matches at home, are projected to spend £240 million or $321 million on food and £297 million or $397 million on alcohol. In fact, TV audiences will separately spend £277 million or $370 million to get a better experience of the World Cup.

The numbers for all these sectors are expected to increase even further if England becomes one of the two finalists of the mega event.

Buy These 3 European Mutual Funds

All the reports clearly indicate that Europe's economy will get a boost from the World Cup. Moreover, the Vanguard FTSE Europe ETF gained 5.5% in the last one year. Additionally, mutual funds related to the European equity market also registered strong returns. According to Morningstar, the region's equity mutual funds posted one-year returns of 6.3%. 

This upbeat backdrop calls for investing in three European mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have impressive one-year annualized returns. They also have minimum initial investment within $5000 and low expense ratios.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more:  Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money ).

T. Rowe Price European Stock  PRESX seeks long-term capital appreciation. PRESX invests a major portion of its assets in companies that are located in Europe or whose operations are related to this region. PRESX generally invests in common stocks of companies irrespective of their market capitalization.

PRESX carries an expense ratio  of 0.96% compared with the category average of 1.31%. Moreover, PRESX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 3.5%.

The fund has a Zacks Mutual Fund Rank #2. Dean Tenerelli is the fund manager of PRESX since 2005. As of the last filing, all of the fund's assets are invested in Greater Europe.

Fidelity Europe  FIEUX seeks appreciation of capital in the long run. The fund invests a large chunk of its assets in common stocks of different European companies. It may also invest in securities of companies that are based economically in Europe.

FIEUX carries an expense ratio of 0.96% compared with the category average of 1.31%. Moreover, FIEUX requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 5.9%.

The fund has a Zacks Mutual Fund Rank #2. Stefan Lindblad is one of the fund managers of FIEUX since 2013. As of the last filing, 97.88% of the fund's assets are invested in Greater Europe.

BlackRock EuroFund Investor A  MDEFX seeks appreciation of capital by investing in companies based in European countries. The fund generally invests a bulk of its assets in equity securities, including convertible securities and common stocks of European companies. MDEFX invests in companies irrespective of their market cap.

MDEFX carries an expense ratio of 1.25% compared with the category average of 1.31%. Moreover, MDEFX requires a minimal initial investment of $1,000. The fund has one-year annualized returns of 2.9%.

The fund has a Zacks Mutual Fund Rank #2. Nigel Bolton is one of the fund managers of MDEFX since 2010. As of the last filing, 95.29% of the fund's assets are invested in Greater Europe.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Mutual Funds
Referenced Symbols: PRESX , FIEUX , MDEFX


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