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Wisdomtree chief investment strategist Luciano Siracusano on the best European investment opportunities.
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Jane Q Nicole European Central Bank president Mario draw these comments this morning.
And we've been talking about the sold say but in essence he said bond buyback program you'll hear something about it Thursday it will that -- the European markets to slip but.
Dropped his comments have rocked the US markets as well.
Will the latest reaction caused more investors to run from Europe -- and they invest without risk.
Last week wisdom tree restructured one of their international ETFs exchange traded funds to become a vehicle.
That does some European companies with a lot of people think are very cheap right now.
With 50% of their revenue generated outside Europe so in -- European companies that aren't so dependent on Europe.
The fund also looks for -- big dividend payers 'cause everybody's loving dividends right now but what makes it most unique is on top of all of that.
It hedges against Euro currency risk as the euro's been up down all around so where are they seeing the best European opportunities.
Let's find out from the Chiapas circus on how he's with entries chief investment strategist.
So you took existing hot and it's called hedge HE deejay right.
He took that and you tweaked it a little bit what gave you the idea to do that.
Well you know -- trio is -- -- violations around the world and one of the things we noticed in Europe.
Is that a lot of these equity markets are trading right now at a lower PE ratios and the S&P.
-- dividend yields at least twice as high as the SP 500.
So that to us was a trigger of that it's -- there's a potential.
Opportunity here with European stocks.
But we said to ourselves was is or -- way to limit.
The currency risk that people get exposed to when they -- European securities.
And that was the idea of just narrowing it down to European exporters and doing what we can to hedge out the impact of the currency.
I just want -- a little more understandable for people should be the European currency risk that Euro.
Some of that has to do with the stronger the Euro gets the more expensive it becomes when the products are put out.
By European companies for people to buy them in other countries so a higher Euro your most worried about.
Well from a US investor perspective -- worried about a loss -- depreciating -- because that's gonna impact your return.
So over the last year the Euro is down about 10%.
It's down about 20% since its high.
And so that can impact the returns you haven't as the US and master.
If you think European stocks are cheap and attractive here which you do which we do we think there's a way to limit.
The movement in the currencies that the currency goes from -- 125.
Against the dollar to 100.
In that impacted by the currency -- I saw an interesting headline Christian Science Monitor it said the hottest trade.
European stocks -- -- lot of viewers scared about that but when you look at what's in New York hedge.
Fund HE DJ you've got names like dime or Anheuser-Busch beer -- sometime there you've also got another Spanish bank Banco Bilbao you've got.
You know -- -- for the assert summer consumer cyclical names and then some are.
Banks you're okay with banks are especially Spanish.
Well the bank.
Concentration is relatively low it's about 78% in the -- expects a much smaller financial concentration you would -- and a cap weighted European index fund.
About 25% of the portfolios French German and Netherlands when you look at the top holdings they are very familiar and in the largest holding is Anheuser-Busch.
And which is actually -- European company now.
But if people in America continue to buy BMW's.
And Mercedes and we continue to take their -- -- But can be very good for these -- -- European companies that export to United States.
I was on -- street Los Angeles last week and I counted thirteen Mercedes all in a row and it wasn't outside dealership.
Okay except I was doing pretty darn well at least one selling to the US which he -- -- good to see it thank you so much great -- that's fun this HE DJ the hedged equity funds.
It's not -- S&P 500 but year to date it is up about 6%.
