Is now the time to diversify? U.S. markets have floundered somewhat amid rising uncertainty. What’s more, red hot valuations and significant concentration risk pose added concerns that key U.S. indexes may not repeat the strong performances they produced in 2024. That may speak to the case for adding some foreign or international equities. Intriguingly, following a few years of tepid performance, European equities have stood out to start 2025. That could point to a role for a quality Europe ETF like OEUR.
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The ALPS O’Shares Europe Quality Dividend ETF (OEUR ) tracks the O’Shares Europe Quality Dividend Index. Charging 48 basis points (bps), the fund invests in large and midcap firms based on factors including high quality, low volatility, and high dividend yield. Its managers use metrics to craft an overall score that accounts for those factors. The quality Europe ETF applies a 5% weight cap on each individual firm, with a 22% cap on overall sectors. That can help the fund limit a potential overweight towards big dividend sectors like utilities.
That approach has helped OEUR return 10.15% YTD per YCharts data. That has outperformed the fund’s ETF Database Category average per ETF Database data. What’s more, it has also outperformed the MSCI ACWI Ex USA Net Total Return YTD. Together, its price, rising above both its 50 and 200-day Simple Moving Averages (SMAs), indicates significant momentum.
What might speak to the quality Europe ETF’s performance and momentum? The above domestic concerns may be seeing U.S. investors boost European firms. Specifically, too, it’s worth mentioning whether policy shifts could see currency shifts boost those firms as well. Trade wars, too, could see European consumers turn to European products. Finally, the continent’s relatively limited performance in recent years could make certain firms fit into a value mold. With a dividend view, the ETF could help identify potentially durable candidates. Looking ahead, OEUR could provide a compelling opportunity to diversify.
VettaFi LLC (“VettaFi”) is the index provider for OEUR, for which it receives an index licensing fee. However, OEUR is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OEUR.
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