Opinions
John Hood
iShares MSCI Europe Financials ETF
EUFN-Q
DON'T BUY
Jan 10, 2025
$23.350
Stock price when the opinion was issued
E.T.F.'s
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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.
E.T.F.'s
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.
E.T.F.'s
PAST TOP PICK
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.
E.T.F.'s
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.
E.T.F.'s
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.