Investors have become accustomed to the dominant performance of US stock markets. However, European markets are leading so far in 2025.
As recently reported by Bloomberg, eight of the world's 10 best-performing stock markets in 2025 are in Europe. That includes Germany's DAX Index, which has rallied more than 30% in dollar terms. Other top-performing stock markets have been located in Slovenia, Poland, Greece, the Czech Republic, Hungary, Spain, and Austria.
The pan-European Stoxx 600 Index is beating the S&P 500 Index (SP: .INX) by a record 18 percentage points in dollars. According to Bloomberg, this has been driven by Germany's historic fiscal spending plans and a stronger euro. Investors are turning away from US markets amid tariff concerns and fiscal debt, and turning to European markets.
The S&P 500 rebounded in May, but remains well behind several European markets.
The good news for ASX investors looking to buy European stocks is that there are several European-focused ASX exchange-traded funds (ETFs). Here are two to consider.
Betashares Europe Currency Hedged ETF (ASX: HEUR)
The Betashares Europe Currency Hedged ETF provides exposure to Europe's largest companies that generate a substantial portion of their revenues outside the Eurozone. There are currently 126 companies in this ETF, providing substantial diversification. One advantage of this ETF for ASX investors is that it includes several sectors that are underrepresented on the ASX. For example, 21% of the fund is in the industrials sector. This ETF is also currency hedged, reducing currency risk for ASX investors.
For a management expense of 0.56%, investors own companies from countries that Bloomberg listed as home to the top-performing stock markets for the year to date. As of 30 May, 34% of the investments were located in Germany, 27% in France, 11% in the Netherlands, and 9% in Spain.
The HEUR ETF is up 12% for the year to date. This significantly outperforms the iShares S&P 500 AUD ETF (ASX: IVV), which is down 4% over the same time frame.
Global X EURO STOXX 50 ETF (ASX: ESTX)
Another option to consider is the Global X EURO STOXX 50 ETF. For a management expense of 0.35%, this ETF provides exposure to 50 of the largest and most liquid companies in the Eurozone.
As of 30 April, 38% of the investments were listed in France, 29% in Germany, 13% in the Netherlands, and 9% in Spain.
For the year to date, the ESTX ETF is up 18%, substantially outperforming both the HEUR ETF and the IVV ETF.
The post Why it could be time to buy European-focused ASX ETFs appeared first on The Motley Fool Australia.
Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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