3 of the Best Mutual Funds to Play European Stocks

Advertisement

Europe may be the best region in the world to invest right now, and for the foreseeable future, and you can capture this positive momentum with one of the best mutual funds investing in European stocks.

Europe growth

With a strong dollar and a moderating economy holding back U.S. stocks and with slowing economies in emerging markets, such as China, Europe is shaping up to be the the sweet spot of 2015.

The primary European stock benchmark, the MSCI EAFE Index, is up an impressive 6.6% year-to-date, while the S&P 500 has a modest 1% gain. Emerging markets, as measured by iShares MSCI Emerging Markets (EEM), are about the same as U.S. stocks with a 1.6% price gain on the year.

With more dollar strength in the near term and emerging markets running out of steam, Europe may continue its leadership throughout 2015 and beyond.

Here are three of the best mutual funds for investing in European stocks:

Best Mutual Funds for Investing in European Stocks: Vanguard European Stock Index (VEURX)

VanguardLoad Fee: None
Expenses: 0.26%, or $26 annually for every $10,000 invested
Minimum Initial Investment: $3,000

We’ll start with the cheapest fund in the Europe stock category, Vanguard European Stock Index (VEURX).

While the U.S. dollar remains strong and the Federal Reserve mulls over a rate hike later this year, the European Central Bank started a quantitative easing program earlier this year and plans to continue to at least September.

This will help pad profits of large-cap exporting companies in Europe.

Top holdings in VEURX having a strong 2015 include Novartis (NVS), BP (BP), and Bayer.

Although performance will rarely find VEURX near the top ranks of Europe stock funds, its passive index approach allows for reliable long-term returns, which have been consistently better than the MSCI EAFE. The fund tracks the FTSE Developed Europe Index, which captures nearly the entire European stock market.

Best Mutual Funds for Investing in European Stocks: Fidelity Europe (FIEUX)

Fidelity mutual fundsLoad Fee: None
Expenses: 0.96%, or $96 annually for every $10,000 invested
Minimum Initial Investment: $2,500

Fidelity Europe (FIEUX) is a low-cost actively-managed fund that is having a stellar 2015.

Although the manager, Stefan Lindblad, has only been at the helm of FIEUX for about 18 months, the performance under his tenure is nothing but solid. Year-to-date, FIEUX is up 10.4%, which is head and shoulders above the 6.6% on the MSCI EAFE and it beats 92% of Europe stock category peers. The yearly return beats two-thirds of the category.

At $1.2 billion in assets under management, Fidelity Europe is not too big to suffer from asset bloat and the portfolio has more than just large-cap stocks — more than one-third of the holdings are mid-cap stocks, which gives the fund a bit of an aggressive edge that can translate into higher average returns in the long run (and during short-term periods of growth).

You may not find a better Europe stock fund that matches or exceeds the combination of low expenses and high performance.

Best Mutual Funds for Investing in European Stocks: T. Rowe Price European Stock (PRESX)

TRowe185Load Fee: None
Expenses: 0.96%, or $96 annually for every $10,000 invested
Minimum Initial Investment: $2,500

Another outstanding actively-managed European stock fund with below-average expenses is T. Rowe Price European Stock (PRESX).

Lead manager Dean Tenerelli has been managing the fund for nearly 10 years, which is a period that includes one of the most challenging market conditions in history for an international stock fund manager. The experience is valuable, to say the least, and an added advantage for shareholders of PRESX.

For evidence of a superior long-term track record, the 5-year annualized return of 15.2% ranks ahead of 99% of Europe stock funds and the 10-year return of 8.0% puts PRESX in the top third.

The T. Rowe Price European Stock portfolio provides a pure dose of European exposure with approximately 30% of the holdings coming from the United Kingdom and the remaining portfolio is allocated to developed Europe.

Top sectors include financial services, consumer cyclicals, and industrials.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm. Under no circumstances does this information represent a recommendation to buy or sell securities.

More From  InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2015/06/3-of-the-best-mutual-funds-to-play-european-stocks-veurx-fieux-presx/.

©2024 InvestorPlace Media, LLC