European Tourist

Content provided by Scott Kubie, CFA, CLS Chief Strategist

I’ve never been to Europe, although I hope to go soon. When I hear people talk about traveling in Europe, they always break it down by country because there is too much history and culture to take in during a single trip. When I visit, my approach will be to focus on regions and groups of countries. My top sights to see are: London’s House of Commons, Normandy’s beaches, and Paris’s Louvre Museum. My wife’s big goal is to see Wimbledon and the French Open. That should take at least three or four trips.

The same challenge is true when investing in Europe. There are a number of broadly diversified European ETFs that own stocks in most of the countries. Otherwise, there are a score of individual- country ETFs. In between, there isn’t much.

As an alternative, ETFs from different countries can be combined into blocks for evaluation. Here are my combinations:

The first block centers on the North Sea and includes England, Norway, the Netherlands, and Belgium. While not technically bordering the North Sea, Ireland is included too. These countries share a culture focused on what the sea can bring them. Sometimes that is oil for export, and other times it is trade from around the world.

A second block centers on Central Europe and includes Germany, Denmark, Switzerland, Poland, the Czech Republic, Hungary, Austria, Sweden, and Finland. This group represents the industrial powerhouses of Europe. Whether home to Swiss chemicals, German machinery, or Swedish conglomerates, these countries are globally competitive manufacturers that export around the globe.

The third block centers around the Mediterranean Sea. While wonderful places for a cruise, France, Spain, Portugal, Italy, and Greece have been terrible investments in recent years. Separating these countries from the more competitive regions of Europe allows us to chart potential recoveries as they solve some structural issues.

This technique allows me to see Europe more efficiently. By grouping the countries into similar blocks, I can examine broadly diversified sections and find the more attractive places to visit and invest in from each region. Alternatively, I can emphasize the region that is most attractive at the time, while staying diversified.

As we have noted in other articles and commentaries, we believe Europe is an attractive market to invest in. And, it is also becoming more attractive to visit. The decline in the Euro should make a trip cheaper, and lots of countries are anxious for the benefits of additional tourists. But as both traveler and investor, I think I’ll get to see more if I don’t try to see everything at once.


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An ETF is a type of investment company whose investment objective is to achieve the same return as a particular index, sector, or basket. To achieve this, an ETF will primarily invest in all of the securities, or a representative sample of the securities, that are included in the selected index, sector, or basket.  ETFs are subject to the same risks as an individual stock, as well as additional risks based on the sector the ETF invests in.