ECONOMIC OUTLOOK

After strong rally, value remains in European equities

Briefcase

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


 

YOU MAY ALSO LIKE

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.