After strong rally, value remains in European equities


Added To Briefcase

Yield Spread Between European Stocks and Bonds Has Widened


Europe’s equity returns lagged those in the U.S. for much of the last decade, but Europe has taken the lead so far in 2017. The strong rally has narrowed a once wide valuation gap between the two markets, but value should remain in European stocks. This is particularly clear when comparing yields between European equities and bonds. While bond yields remain near historic lows, the MSCI Europe Index’s dividend yield has drifted higher over the last 15 years. In the past, European equities may not have been a compelling option for investors seeking additional income in their portfolios, but in today’s low yield world they increasingly make sense. With economic activity picking up and many political headwinds in the past, the European equity rally may have more room to run.

Any reference to a company, product or service does not constitute endorsement or recommendation for purchase and should not be considered investment advice.


Sign up today

Get industry-leading RIA insights delivered to your inbox

*Required field

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

Information provided on this website is intended for use by financial advisors with persons who are eligible to purchase U.S.-registered mutual funds.

Securities offered through American Funds Distributors, Inc.

Content contained herein is not intended to serve as impartial investment or fiduciary advice. The content has been developed by Capital Group, which receives fees for managing, distributing and/or servicing its investments.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.