EZU ETF

iShares MSCI Eurozone ETF offers a diversified portfolio of Eurozone large and mid-cap stocks, with an expense ratio of 0.51%. EZU has underperformed the S&P 500 due to lower exposure to the technology sector but shows steady performance and balanced sector allocation. Earnings growth for EZU's portfolio is expected to accelerate in 2025 and 2026, supported by lower inflation and favorable monetary policy in the Euro area.

European companies are increasingly relying on share buybacks to return cash to shareholders, a sign of confidence about their prospects that is helping lift stock markets to new highs.

The likelihood of ECB rate cuts in June, along with decreasing inflation and a more positive growth forecast, the recovery of the struggling German economy, better corporate earnings, and lower valuations have made Euro zone ETFs attractive investments at the moment.

By Hyun Kang Research Analyst U.S. equities don't have a monopoly on acronyms. Before there was the Magnificent 7, it was the FAANGS.

iShares MSCI Eurozone ETF is a large and liquid ETF that offers diversification into quality European stocks. EZU is heavily invested in Germany and France, which are experiencing weak economic fundamentals and declining PMIs. The current valuation of EZU suggests that it may move lower in the next few months, making it a sell at the moment.

Before yesterday's ECB meeting, there was a bit of uncertainty about whether the ECB would hike or not, with markets pricing in a 65% implied probability of a 25-bps hike. A break below the May low of 1.0635 still looks likely for the EUR/USD.

Rising corporate profits account for almost half the increase in Europe's inflation over the past two years, as companies increased prices by more than spiking costs of imported energy. Europe's businesses have so far been shielded more than workers from the adverse cost shock.

EZU invests in eurozone stocks. The fund appears undervalued on the basis of forward earnings growth potential.