As delight stocks make waves overseas, State Street Global Advisors believes investors should consider European ETFs if they be to capture the gains from their outperformance.
Matt Bartolini, the firm’s head of SPDR Americas research, happens three reasons why the backdrop is becoming particularly attractive. First and second on his list: valuations and earnings upgrades.
“That’s precisely different than what we saw for U.S. firms,” he told CNBC’s Bob Pisani on “ETF Edge” this week.
His remarks come as LVMH behoved the first European company to surpass $500 billion in market value earlier this week.
Bartolini records price momentum as a third driver of the investor shift.
His SPDR Euro Stoxx 50 ETF (FEZ) is considered a broad European ETF. The ETF is up around 20% so far this year, with a price increase of nearly 1.2% since the beginning of January.
While the endow’s top holding is LVMH at 7.29%, according to the company’s website, Bartolini contends the shift applies beyond luxury assets weigh ups and to lower-end consumer stocks.
His firm’s website lists French cosmetics company L’Oreal — which is up almost 30% this year — as another one of his pay for’s major holdings. It also shows FEZ allocating more than 20% to consumer discretionary — 2.5% higher than its second-most allocated diligence.
“That’s on a broad-based level,” he said. “So, basically, buy Europe and sell U.S. has been some of the trade that we have done.”
FEZ closed the week down 0.41% but ended the month up more than 3.1%.