The Stoxx 600 rose nearly 8% in 2024, while the UK’s FTSE 100 rose 6%.
The European Stoxx 600 index and Japan’s Nikkei 225 hit record highs earlier this year, along with the S&P 500. However, the Stoxx and Nikkei are trading at much more attractive valuations. FactSet data shows that the former trades at 15 times trailing 12-month earnings, while the latter has a multiple of 23. The S&P 500, meanwhile, sports a multiple of earnings of 27 times.
According to Bob Armstrong, strategist at Schroders, investors looking for cheap stocks should look abroad.
This trend is expected to continue, creating an opportunity for investors to find attractive investments at a cheaper valuation, Armstrong said.
In particular, he is bullish on the Japanese market, where he sees the country emerging from a decade-long bear market against a backdrop of global growth. He also highlighted the Tokyo Stock Exchange’s initiative to push companies to improve their profitability and corporate governance. These measures, he said, have led to stocks being more efficient at managing money and posting more dividends with record buybacks.
Year to date, the Nikkei has risen nearly 20%, outpacing the S&P 500’s 17% jump.
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Both the UK and Europe in general look promising, according to Armstrong. Europe continued to surprise positively, despite recessionary concerns due to rising tensions between Russia and Ukraine and a potential energy crisis. Armstrong highlighted that the first quarter earnings season in Europe delivered some of the best earnings growth in years. Additionally, these markets could receive a boost as the European Central Bank and Bank of England begin interest rate cuts.
“Both markets are more sensitive to the direction of short-term interest rates because they have more adjustable-rate mortgages than we do,” the strategist said. “They are more dependent on short-term financing through commercial banks than we are.”
The Stoxx 600 rose nearly 8% in 2024, while the UK’s FTSE 100 rose 6%.
Armstrong hasn’t disclosed individual stocks, but investors looking for access to these foreign markets can get it through exchange-traded funds (ETFs). Here are three examples:
1. iShares MSCI Japan ETF (EWJ): The fund is up 11% year to date and charges 0.5% in fees.
2. iShares Core MSCI Europe ETF (IEUR): The ETF is up 6% in 2024. It has an expense ratio of 0.11%.
3. Franklin FTSE United Kingdom ETF (FLGB): The fund has gained 8% this year and has an expense ratio of 0.09%.
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The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-08-06 15:30:00. Original title: 3 ETF da comprare per investire nei mercati più promettenti del 2° semestre 2024
