4 European Mutual Funds to Ride on Stellar Economic Growth

By Zacks Equity Research, Zacks Investment Research

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The European economy is growing by leaps and bounds. Such a claim is evident from the fact that some of the major indicators of economic growth in the region have recently breached records. Manufacturing and service activity have blossomed due to strong economic expansion in Germany, Ireland and France. Further, economic confidence is at its best levels in about 17 years.

4 European Mutual Funds to Ride on Stellar Economic Growth
Source: Flickr

The European Central Bank also has a positive outlook on economic growth in the region for 2018. Thus, this is the best time to invest in a portfolio of mutual funds from the region.

Eurozone Economic Activity at its Fastest Pace Since 2011

The Eurozone achieved its fastest pace of economic activity since 2011 on the back of burgeoning domestic demand and a surge in service sector. Moreover, factories gained from stupendous growth in export order, which remains near its record levels. Further, economists have also confirmed that Eurozone economic growth in 2017 has been the best in a decade.

The European Central Bank, meanwhile, raised its growth and inflation forecasts for the Eurozone. Officials from the central bank also predicted that inflation would linger below the target of 2% till 2020. “Risks surrounding the euro area growth outlook remain broadly balanced,” ECB President Mario Draghi had commented.

Further, he stated that the economy has been gaining from an increase in business investments, improved profits and rising demand. The GDP forecasts 2018 and 2019 were raised to 2.3% and 1.9%, respectively.

Economic Confidence in Europe at 18-Year High

Economic confidence in the Eurozone hit its highest level since 2000. Measured by the European Commission, the reading came in at 116, surpassing the expectation of 114.8. Analysts have stated that such a record surge followed an increase in the outlook for services and industry in the region.

Additionally, unemployment continues to recede. For the record, the unemployment rate is at its lowest-ever level in Germany and at a nine-year low in Spain.

Further, industrial confidence rose to 9.1 — the highest level in more than three decades. Also, the Business Climate Indicator, which measures the conditions that manufacturers face, also hit a high. Such an overall rise in confidence was achieved on the back of strong demand from customers and manufacturers responding efficiently to rising demand at the same time.

Manufacturing and Service Activities Burgeoning in Europe

Manufacturing and service activities in Europe hit fresh records following an increase in the composite Purchasing Managers’ Index. Such an index for manufacturing and services increased to 58.1 in December from 57.5 in the prior month.

This marks its highest level since February 2011. A reading above 50 indicates economic expansion. Strong economic growth from Germany, France and Ireland supported such gains, with manufacturing activity in Germany rising to a seven-year high.

4 Best-Performing European Mutual Funds

Given such positives, we have highlighted four European mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.

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.

The Eurozone is growing at an encouraging pace under favorable economic conditions. This is why we recommend the following mutual funds from Europe.

European Mutual Funds to Ride on Stellar Economic Growth: T. Rowe Price European Stock Fund (PRESX)

T. Rowe Price European Stock (MUTF:PRESX) seeks appreciation of capital in the long run by investing in common stocks. This fund invests the lion’s share of its assets in companies from Europe. Normally, the fund is invested in companies of any capitalization from a minimum of five countries.

This Europe – Equity product has a history of positive total returns for over 10 years. Specifically, the fund has returned 4.2% over the three-year and 7.6% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

The T. Rowe Price European Stock, as of the last filing, allocates their fund in top two major groups, namely Foreign Stock and Intermediate Bond. The fund has a Zacks Rank #1.

PRESX has an annual expense ratio of 0.96%, which is below the category average of 1.39%. The fund’s respective returns are 26.7% and 6% for the one and three-year annualized periods.

European Mutual Funds to Ride on Stellar Economic Growth: Invesco European Growth Fund (AEDAX)

Invesco European Growth (MUTF:AEDAX) seeks appreciation of capital in the long run and invests the majority of its assets in securities of European countries. The fund invests in companies of all capitalizations, however, a large portion of its assets are invested in small and mid-cap companies.

This Europe – Equity product has a history of positive total returns for over 10 years. Specifically, the fund has returned 8.9% over the three-year and 8.4% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

The Invesco European Growth A, as of the last filing, allocates their fund in top two major groups, namely Foreign Stock and Precious Metal. The fund has a Zacks Rank #2.

AEDAX has an annual expense ratio of 1.34%, which is below the category average of 1.39%. The fund’s respective returns are 28.6% and 10.6% for the one and three-year annualized periods.

European Mutual Funds to Ride on Stellar Economic Growth: Fidelity Europe Fund (FIEUX)

Fidelity Europe Fund (MUTF:FIEUX) seeks appreciation of capital in the long run. It invests primarily in common stocks of different European companies.

This Europe – Equity product has a history of positive total returns for over 10 years. Specifically, the fund has returned 8.3% over the three-year and 8.3% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

The Fidelity Europe, as of the last filing, allocates their fund in top two major groups, namely Foreign Stock and Intermediate Bond. The fund has a Zacks Rank #2.

FIEUX has an annual expense ratio of 0.96%, which is below the category average of 1.39%. The fund’s respective returns are 31.3% and 10.2% for the one and three-year annualized periods.

European Mutual Funds to Ride on Stellar Economic Growth: JPMorgan Intrepid European Fund (VEUAX)

JPMorgan Intrepid European Fund (MUTF:VEUAX) seeks appreciation of capital in the long run. It invests the lion’s share of its assets in equity securities of companies that have the majority of its operations in Western Europe.

This Europe – Equity product has a history of positive total returns for over 10 years. Specifically, the fund has returned 6% over the three-year and 8.5% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

The JPMorgan Intrepid European A, as of the last filing, allocates their fund in top two major groups, namely Foreign Stock and Large Growth. The fund has a Zacks Rank #2.

VEUAX has an annual expense ratio of 1.36%, which is below the category average of 1.39%. The fund’s respective returns are 23.2% and 8.2% for the one and three-year annualized periods.

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