Investors Looking For Exposure To Europe Need To Be Mindful Of The Euro

Investors who are looking to diversify their portfolio across geographic regions aren't alone in their thinking, as many professionals think European stocks can offer a superior return. But there is one major wild card in international investing: currency fluctuations in the foreign exchange market. Related Links: A Smart Idea For Europe Exposure Despite A Strong Euro, Investors Are Still Worried About European Stocks

European stocks appear to be more attractive by default of not coming with built in political risk as opposed to American stocks, Yves Maillot, head of European equities investment division at Natixis Asset Management explained to CNBC early Monday morning. But at the same time, the euro continues to trade at multi-year highs versus the U.S. dollar near $1.20 which implies that any outperformance American investors realized is countered by the decline in the greenback.

Also important to consider is that the continued strength of the euro could result in a correction in European stocks, Maillot continued. This would come at a time when the macro environment across the region are benefiting from "good momentum" and corporate earnings are expected to grow by as much 12 to 13 percent next year.

"If you take the assumption that the euro can go and reach $1.30 against the U.S. dollar, you don't have any growth anymore for the market," he added. "You can see what could be the impact of the strengths of the currency."