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As luxury stocks make waves overseas, State Street Global Advisors believes investors should consider European ETFs if they want to reap the gains from their outperformance.
Matt Bartolini, the company’s head of SPDR Americas research, finds three reasons why the backdrop is becoming particularly appealing. First and second on his list: valuations and earnings increases.
“It’s completely different from what we’ve seen for corporate America,” he told CNBC’s Bob Pisani on “ETF Edge” this week.
His remarks come as LVMH became the first European company to surpass $500 billion in market value earlier this week.
Bartolini cites price dynamics as a third driver of investor change.
Her SPDR Euro Stoxx 50 ETF (FEZ) is considered a large European ETF. The ETF is up about 20% year-to-date, with a price increase of nearly 1.2% since early January.
While the fund’s largest holding is LVMH at 7.29%, according to the company’s website, Bartolini argues the change applies beyond luxury stocks and to lower-end consumer stocks.
Her company’s website lists a French cosmetics company L’Oreal — which is up nearly 30% this year — as another of his fund’s top holdings. It also shows that FEZ allocates more than 20% to consumer discretionary, 2.5% more than its second most allocated industry.
“It’s on a general level,” he said. “So basically buying Europe and selling in the US is part of the trading we’ve seen.”
FEZ closed the week down 0.41% but ended the month up more than 3.1%.