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ECB Lifts Growth Forecast: Buy 3 European Mutual Funds Now

By Zacks Investment ResearchStock MarketsMar 11, 2018 09:30PM ET
www.investing.com/analysis/ecb-lifts-growth-forecast-buy-3-european-mutual-funds-now-200297330
ECB Lifts Growth Forecast: Buy 3 European Mutual Funds Now
By Zacks Investment Research   |  Mar 11, 2018 09:30PM ET
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The European Central Bank (ECB), until now, has been saying that it is ready to increase the level of quantitative easing program in both duration and size in order to stimulate the Eurozone economy. But, this time, it removed such a statement from their communiqué, indicating that stimulus measures will soon come to an end in the Eurozone, a sign that the economy is improving.

The ECB has updated its 2018 growth forecast to a healthy 2.4%, from 2.3% estimated last December. The Eurozone economy has, in fact, enjoyed faster growth than the United States in 2017. The Eurozone economy grew 2.4% last year, compared with 2.3% growth in the United States, according to preliminary data from Capital Economics.

Economic confidence across the 19 nations is currently at its highest in more than 17 years, per a survey published by the European Commission. Additionally, the unemployment rate in the Eurozone continues to fall at a steady clip. Currently, Eurozone has nearly 1.6 million fewer unemployed people than a year ago.

Europeans, in the meantime, continue to feel confident about their financial health, while political risks subside.

Play the Bright Eurozone Outlook With These 3 Funds

The ECB indicated that it will normalize its monetary policy for the 19-nation euro area. This reflects the bank’s underlying confidence on the economic state of the Eurozone. Given such positives, investing in sound European mutual funds seems judicious. We have, thus, highlighted three such funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to help investors 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 probable 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 (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

T. Rowe Price European Stock Fund PRESX, a Zacks Rank #2 (Buy) fund, invests the majority its net assets in European companies. Under normal conditions, at least five countries will be represented in the fund's portfolio.

This Europe-Equity fund, as of the last filing, allocates funds in two major groups — Foreign Stock and Intermediate Bond. Further, as of the last filing, Nestle SA (SIX:NESN), Novartis AG and Roche Holding (SIX:ROG) AG were the top holdings of PRESX.

The T. Rowe Price European Stock fund, managed by T. Rowe Price, carries an expense ratio of 0.96%, compared with the category average of 1.39%. Moreover, PRESX requires a minimal initial investment of $2,500.

The T. Rowe Price European Stock fund has given an annualized return of 21% and 6.4% in the last one-year and five-year period, respectively.

Fidelity Europe Fund FIEUX, a Zacks Rank #1 (Strong Buy) fund, invests a large portion of its assets in securities of European issuers. It allocates investment across different European countries and invests mostly in common stocks.

This Europe-Equity fund, as of the last filing, allocates funds in two major groups — Foreign Stock and Intermediate Bond. Further, as of the last filing, Getinge AB, Securitas AB and Roche Sap AG were the top holdings of FIEUX.

The Fidelity Europe fund, managed by Fidelity, carries an expense ratio of 0.96%, lower than the category average of 1.39%. Moreover, FIEUX requires a minimal initial investment of $2,500.

The Fidelity Europe fund has yielded an annualized return of 28.6% and 7.6% in the last one-year and five-year period, respectively.

Invesco European Growth A AEDAX, a Zacks Rank #2 fund, invests a major portion of its assets in securities of European issuers. AEDAX seeks long-term growth of capital.

This Europe-Equity fund, as of the last filing, allocates funds in two major groups — Foreign Stock and Precious Metal. Further, as of the last filing, Sberbank, DCC PLC and Deutsche Boerse (DE:DB1Gn) AG were the top holdings of AEDAX.

The Invesco European Growth A fund, managed by Invesco, carries an expense ratio of 1.38%, less than the category average of 1.39%. Moreover, AEDAX requires a minimal initial investment of $1,000.

The Invesco European Growth A fund has given an annualized return of 23.3% and 7.3% in the last one-year and five-year period, respectively.

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Zacks Investment Research
ECB Lifts Growth Forecast: Buy 3 European Mutual Funds Now
 

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ECB Lifts Growth Forecast: Buy 3 European Mutual Funds Now

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