Sometimes, it pays to embrace unique approaches. European equities are proof positive of that sentiment. With Europe equities resurgent, the largest ETF in the category is up 6.42% year-to-date and by more than 20% over the past year.
These are decent returns. However, they pale in comparison to those of the WisdomTree European Opportunities Fund (OPPE ), which is higher by 12.27% this year and 30.53% over the past 12 months. OPPE breaks from the norm of cap-weighted large-cap European equity ETFs. It focuses on fundamentally sound European value fare with potential benefits from geopolitical events and policy shifts. For good measure, a dynamic currency hedge is also part of OPPE’s process, confirming investors have some protection against dramatic moves by the U.S. dollar.
OPPE’s differentiation story doesn’t end there. The ETF, which tracks the WisdomTree European Opportunities Index, is a compelling way for advisors and investors to tap into Europe’s increasingly appealing capital allocation outlook.
Embrace Europe Shareholder Yield with OPPE
Europe has long been home to markets sporting higher dividend yields than the S&P 500 and plenty in which dividend growth is dependable. That is to say, on a historical basis, payouts figure prominently in the return picture of European stocks. But there’s more to the story and OPPE leans into the “more.”
“Companies are increasingly returning capital through share buybacks, which provide another mechanism for distributing excess cash to investors,” notes WisdomTree. “Buybacks can signal management confidence in the company’s fundamentals and a belief that the stock is trading below its intrinsic value. By reducing the number of shares outstanding, buybacks can also improve per-share metrics such as earnings per share and cash flow per share.”
Put simply, OPPE isn’t a dedicated dividend fund, though many of its components are dividend payers. Rather, the ETF emphasizes the concept of shareholder yield. That’s a broader view on how companies return capital to investors, including buybacks, dividends and debt reduction.
That approach OPPE is relevant at a time when more European companies are firming their balance sheets and reducing share counts, but the strategy also has the potential to be a winner for long-term investors because it may be a better approach to value.
“This broader definition of value reflects the different ways companies return capital to shareholders,” adds WisdomTree. “Research has shown that value strategies defined by shareholder yield have historically delivered stronger outcomes than traditional approaches relying solely on valuation multiples such as price-to-book ratios.”
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