European shares are still popular with investors despite gloomy economic data from some of the continent’s most developed countries.
Data from AJ Bell YouInvest customers' top 10 exchange-traded fund (ETF) buys and sells shows that Vanguard’s FTSE Developed Europe ex UK (VERX) has been one of the most popular ETFs both this week and over the last month.
France, Germany and Switzerland make up over half of the market allocation in the ETF and all three countries have reported less than convincing economic numbers.
Germany in particular is struggling this year, with its growth forecast for 2019 recently cut in half to just 0.5% following a higher than expected fall in imports and exports during February.
The country is the largest economy in Europe so data is closely watched as movements one way or the other can often affect the performance of other countries in the Eurozone.
France and Switzerland have also struggled, with manufacturing confidence in both countries down, in the case of France plunging to its lowest level in almost four years.
But perhaps investors are looking to the long-term, as Germany’s economy is expected to grow by 1.5% next year and its Economy Minister has talked up the prospect of a significant recovery.
The French economy is also holding up at the moment despite lower confidence levels. It is pressing other Eurozone countries to enter into a 'growth contract' to help northern-bloc countries boost public spending and improve their economies.
Thanks to its smart stock selection, the Vanguard ETF has consistently delivered better returns than its benchmark, returning 4.24% in the year to March 2019 for example against the benchmark return of 3.84%.
Emerging Markets (EM) or developing economies also appear to be popular with AJ Bell YouInvest customers, with Vanguard FTSE Emerging Markets (VFEM) the ninth most purchased exchange-traded fund in the past month.
Last year wasn’t kind to emerging-market investors after the trade war between the US and China, EM’s biggest player, and economic and currency crises in Turkey and Argentina.
But 2019 could be brighter after growth in China topped 2% in the first three months of the year, easing fears of its economy weakening, while the Turkish economy and currency have both improved.
Also in the top 10 ETFs buys this week is iShares UK Dividend (IUKD), which is popular with investors who want to draw an income from their investments.
The ETF tracks a basket of 50 companies from the FTSE 350 with high dividend yields, excluding investment trusts, and pays a quarterly dividend.
