December 2, 2023

European returns outpace U.S. markets

As luxury stocks make waves overseas, State Street Global Advisors believes investors should consider European ETFs if they want to profit from their outperformance.

Matt Bartolini, the firm’s director of research for the Americas at SPDR, sees three reasons why backgrounds have become particularly attractive. Numbers one and two on his list: valuation and earnings upgrades.

“It’s nothing like what we’ve seen with U.S. companies,” he told CNBC’s Bob Pisani on “ETF Edge” this week.

his remarks as LVMH Earlier this week it became the first European company to be worth more than $500 billion.

Bartolini listed price momentum as the third driver of investor shifts.

his SPDR Euro Stoxx 50 ETF (FEZ) Considered a broad European ETF. The ETF is up about 20 percent so far this year, and its price is up nearly 1.2 percent since early January.

While the fund holds the largest stake in LVMH at 7.29 percent, Bartolini sees the shift not only in luxury stocks but also in low-end consumer stocks, according to the firm’s website.

His company’s website lists the French cosmetics company L’Oreal – up nearly 30% this year – as another major holding in his fund. It also showed that FEZ allocated more than 20% of its funds to consumer discretionary — 2.5% more than its second-largest allocating industry.

“It’s a broad-based level,” he said. “So, basically, buying Europe and selling the U.S. are some of the trades we’ve seen.”

FEZ closed the week down 0.41%, but ended the month up more than 3.1%.