Investors looking to gain global exposure to stocks outside of Canada or the U.S. often have difficulty doing so; with transactional ease and investment knowledge typically centered closer to home, the “home bias” many investors experience in investing in companies in their own back yard can be a difficult bias to overcome.
That being said, a few excellent ETFs are now available to investors looking for such geographical diversification on North American exchanges. One such option for investors considering European companies amid strengthening earnings in many developed European nations is the Vanguard FTSE Europe ETF (NYSE:VGK).
This ETF invests in some of the largest and most well-known names in Europe, focusing on key markets centered in countries such as the U.K. and Germany which remain the powerhouses of the region.
With economic expansion continuing in most European markets, and the European Central Bank (ECB) remaining relatively dovish on monetary policy, the move by many North American investors toward European options is one which should be taken into consideration by all investors.
European valuations remain relatively attractively valued compared to global counterparts, meaning investors looking at European companies are able to pick up some of the best-managed companies in the world at a relative discount when considering the global nature of many of the underlying businesses.
Investors considering Europe should, however, be aware of some of the near-term geopolitical risks unique to the region which may not be as prevalent in other regions of the world such as North America.
As such, the discount received on many of these companies may not be enough to compensate for the increased risk profile of the broader market.
Invest wisely, my friends.
