Opinions
Stan Wong
Vanguard FTSE Developed Europe Index
VE-T
BUY ON WEAKNESS
Feb 27, 2015
Stock price when the opinion was issued
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BMO Europe High Dividend Covered Call Hedged (ZWE-T) or Vanguard FTSE Developed Europe Index (VE-T)? Both well-designed products but are very different in the kind of return profile that give. This one has no covered call overlay on this. This one will tend to outperform in a real bull market.
It's not too late to invest in Europe. Volatility will furnish buying opportunities and VE-T will save investors time from researching the right stock(s) across the Atlantic. VE's top holdings start with SAP, Nestle, ASML Holding, Roche, Shell, Novartis, Novo Nordisk, AstraZeneca, HSBC and Siemens, a cross-section of industries that offers exposure to energy, the weight-loss drugs and banking. In fact, financial services comprise 21.5% of VE, the largest sector, followed by industrials and healthcare. Volumes can be a problem with some international ETFs, but VE trades at a reasonable daily trade of 35,600 shares. This ETF trades at 16.4x PE compared to the CAC 40's 18.5x and the German DAX which clocks in slightly lower. VE pays a 2.79% dividend at a low MER of 0.22%. Best to hold this in a TFSA.
Europe is looking interesting on the back of this huge mass of QE that they are doing. It is something that he is looking at. However, it has run quite a bit, so he would wait and buy on market dips before getting into this.