Vanguard MSCI Europe ETF (VGK): The Best Way To Profit From Europe’s Recovery

VGK’s Sector Weightings

There has recently been a significant increase in capital flowing to this fund in the seven days prior to Aug. 20. According to research firm ETF Channel, there was a $621 million inflow, a week-over-week increase of just over 8%.

Over the past year, the fund has returned 12.5% with a yield a little less than 5.5%.

A look at the technical picture shows Vanguard MSCI Europe ETF (NYSEARCA:VGK) has been in a sharp uptrend since June 24. The fund has climbed more than 12% to the $53 area in the past two months. Technical support exists at $52, creating a strong risk-to-reward ratio for a long-term entry.

Risks to Consider: The eurozone is improving, but it still has a long way to go. Southern regions such as Italy and Spain may continue to struggle while they gain footing. I’m not suggesting that investors go all-in on the pending EU recovery, as the risk remains high despite the positive signs. However, it is time to start diversifying into Europe to capture the substantial upside potential.

Action to Take –> Entering the VGK ETF at the current level in the $53 area with stops just below support at $52 makes solid technical sense. My six-month target for shares is $60.

– David Goodboy

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