4 Hot Mutual Funds To Buy As ECB Raises Growth Projections

On Dec 14, ECB President Mario Draghi announced his decision to keep borrowing rates unchanged and slashed the quantitative easing program to half. The ECB chief also raised the growth and inflation forecast for the euro area. Though the inflation rate remains well below the target rate of 2%, the central bank is confident that the economy will reach the targeted level gradually. Further, the central bank has raised its growth projection for the economy through 2020.

Manufacturing activity in Europe is also burgeoning and hit a seven-year high last Thursday, buoyed by a surge in business investments. Such encouraging economic conditions make the eurozone a hotbed for investors and we suggest you bet on the following mutual funds from Europe.

ECB Raises Growth Forecast for 2018

The ECB decided to leave its deposit rate unchanged at -0.4%. The main referencing rate also remained 0%. In a statement, the ECB said that the interest rate would "remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases."

Moreover, the European Central Bank raised its growth and inflation forecasts for the eurozone on Dec 14. 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," said ECB President Mario Draghi. Further, he stated that the economy has been gaining from an increase in business investments, improved profits and rising demand.

Draghi also commented that economic improvement in the area was consistent in the third quarter of 2017. Real GDP increased 0.6% quarter over quarter following 0.7% growth in the second quarter. The GDP forecasts for 2017, 2018 and 2019 were raised to 2.4%, 2.3% and 1.9%, respectively. Further, it gave the first forecast for 2020 of 1.7%. (Read More)

Eurozone’s PMI at a Seven-Year High

The composite purchasing managers’ index (PMI) for the euro area notched up an 82-month high on Dec 14. The reading came in at 58%, higher than 57.5% in November. This indicates that businesses in the euro area have gathered steam as 2017 nears its end. Such a reading also indicates economic expansion of 0.8% in the fourth quarter.

Further, growth in new business also notched up a 10-year high as the new orders subindex rose to 57.9% from 57.3% earlier. Moreover, the service industry has risen 56.5% this month, pushing the business expectations gauge up to a three-month high of 65.6%. Finally, the index that measures output rose to a 17-year high to 62% and the purchase index touched 52.3% — its highest level since 1998.

4 Best-Performing European Mutual Funds

Here, 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-year and year-to-date returns. Additionally, the minimum initial investment is within $5000.

The eurozone is growing by leaps and bounds under favourable economic conditions. The central bank has projected that the GDP will expand by as much as 2.3% in 2018 alone. This is why we suggest that you should invest in the following mutual funds from Europe.

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.

T. Rowe Price European Stock 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.

PRESX has an annual expense ratio of 0.96%, which is below the category average of 1.39%. The fund’s respective returns are 23.6% and 4.5% for the year-to-date and three-year annualized periods.

Invesco European Growth A 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.

AEDAX has an annual expense ratio of 1.34%, which is below the category average of 1.39%. The fund’s respective returns are 24.2% and 9.3% for the year-to-date and three-year annualized periods.

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

FIEUX has an annual expense ratio of 1.06%, which is below the category average of 1.39%. The fund’s respective returns are 25.1% and 8.1% for the year-to-date and three-year annualized periods.

JPMorgan (NYSE:JPM) Intrepid European A 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.

VEUAX has an annual expense ratio of 1.42%, which is below the category average of 1.39%. The fund’s respective returns are 20.1% and 6.1% for the year-to-date and three-year annualized periods.

Want key mutual fund info delivered straight to your inbox?

Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>