Stockchase Opinions

John Hood iShares MSCI Europe Financials ETF EUFN-Q DON'T BUY Jan 10, 2025

He's never made money investing in Europe. One reason is that they have some very funny labour rules, such as not being able to fire anyone. Government coalitions are always ready to break apart. An investor probably already has North American financials, so to invest in this would put a portfolio overweight in financials.

A lot of global funds are 40-50% US anyway, so he just buys the S&P.

$23.350

Stock price when the opinion was issued

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DON'T BUY

He doesn't like European banks. They face a lot of headwinds. For example, Deutsche Bank didn't pass their stress test. Look at U.S. or Canadian banks instead. Europe is 18 months behind the U.S. in the business cycle so it's growing at a slower pace.

BUY

The last six months have been a perfect storm for Europe. Resurgence of populist policies, trade tensions. Nobody believes in Europe anymore. He thinks there is good value there. Negative interest rates are certainly a headwind. All you need in the sector is a very little positive news. He likes it.

TOP PICK
It has been left for dead. It is cheap. The dividend yield is near 6%. The catalyst will be the move in fiscal policies in Europe.
TOP PICK

ETF with high dividend It holds 30% UK banks. The Brexit story will continue, but a no-deal Brexit is off the table. Expectations for Euro banks can't get lower. EUFN pays a 5% yield. The average company trades below book value. This space is so unloved that it's time to buy.

PAST TOP PICK
(A Top Pick Sep 26/19, Up 4%) Europe has zero expectations for growth, so this was a reluctant top pick. Europe has been left for dead. Long-term though, this should be fine, because of rock-bottom interest rates there, there's a move from bonds into stocks.
PAST TOP PICK
(A Top Pick Sep 26/19, Down 18%) Expectations and valuations for European banks are so low now and have been so battered. A good sign is that Europe is moving towards a discal union. This ETF is poised for a massive cyclical bounce. At least, you're paid to wait with this ETF.
BUY
European banks present the biggest value opportunities out there. They've been left for dead. Stress tests have made them extremely conservative. Trading below book value, enormous dividend yields. Short term is anybody's guess, but you should be happy 1-2-3 years out. Long term, tactical holding.
BUY
European financials. Boasts great earnings growth and good loan growth. She expects good surprises. The German election is a potential catalyst.
BUY
Basket of European banks, insurers, investment managers, and diversified financial companies. Likes European banks, as they're cheaper than ones in Canada or US. Half the price to book of US financials. 48 bps. A good value play into a sector and a geography that hasn't been performing well until earlier this year, and has a lot of catchup room.