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Anonymous Europe ETFs You Need to Know Now

August 9, 2013 3:20 pm
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The Eurozone has been eerily tranquil in recent weeks. Once-bitten, twice shy investors know tranquility and Eurozone investing have not resided in the same much over the past few years, but that does not change the fact some marquee Europe ETFs are enjoying stellar runs.

For example, the Vanguard FTSE Europe ETF (NYSE: VGK) is up more than eight percent in the past month. The iShares MSCI EMU ETF (NYSE: EZU) is up 10.6 percent over the same time and the list goes on from there.

Related: ETFs For a European Recovery.

With Europe, particularly the PIIGS, there can be no guarantees regarding ongoing tranquility. However, of the small amount of ETFs making new all-time highs over the past two days, several have significant Eurozone exposure.

With that in mind, the time looks appropriate to consider some unheralded Europe ETFs.

First Trust STOXX European Select Dividend Index Fund (NYSE: FDD)
One school of thought regarding investing in Europe is that an investor might as well be compensated for the risk. The First Trust STOXX European Select Dividend Index Fund does that with a 30-day SEC yield of 6.37 percent.

FDD is not a pure Eurozone play as the U.K. accounts for 36.6 percent of the ETF’s weight, but that is alright because the U.K. is one of the more impressive developed market dividend destinations outside of the U.S. Another 11.7 percent of FDD goes to Switzerland, so Eurozone exposure is significantly reduced with this ETF.

Those that use size as a barometer of an ETF’s worth are missing out. The $49 million ETF is up 8.3 percent in the past month.

PowerShares BLDRS Europe Select ADR Index Fund (NASDAQ: ADRU)
Even fewer investors are paying attention to the BLDRS Europe Select ADR Index Fund and that is evident by the fund’s AUM total of $14.8 million. Again, that is a shame because ADRU is up 7.4 percent in the past month.

Like FDD, ADRU devotes a significant chunk of its weight to the U.K. and Switzerland, in this case 59 percent. Throw in another 2.2 percent to Denmark and ADRU is light on Eurozone nations. The fund, however, is not light on familiar names as HSBC (NYSE: HBC), BP (NYSE: BP), Total (NYSE: TOT) and Sanofi (NYSE: SNY) are all found among ADRU’s top-10 holdings.

Although ADRU only trades about 1,500 shares per day, there are no liquidity issues here. Al of the fund’s holdings trade in the U.S. and the ETF rarely trades at noticeable premiums or discounts to its net asset value, according to PowerShares data. In fact, that has only happened twice in the past four quarters.

Market Vectors Germany Small-Cap ETF (NYSE: GERJ)
Or the rival iShares MSCI Germany Small-Cap ETF (NYSE: EWGS). Both have outpaced the iShares MSCI Germany ETF (NYSE: EWG) over the past month. GERJ trades at a discount relative to EWG and the former is up 15 percent since it was profiled at the start of the year. Both GERJ and EWGS are heavy on industrials and financials with those sectors combining for more than 45 percent of each fund’s sector weight.

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