Europe Breakout

With intraday action on Wednesday (4/18), the First Trust Europe AlphaDEX Fund FEP broke a double top at $41, which completes a bullish triangle pattern. Resistance for those long is visible at the $42 level, its all-time high. Support is now established between $38 and $38.50. The fund offers a score of 4.66, which tops both the average Non-US Equity (3.98) and All Europe (3.58) fund. So far this year, FEP even finds itself within the top decile of All-Funds, up 4.71% through market close on 4/17. Those interested in long exposure may initiate positions on the breakout and use $37.50 as a stop (about 8.5% away). This fund would fit nicely into the International sleeve of a portfolio and could take up a decent size chunk of the Developed Market portfolio, offering a better way to gain exposure to broad Europe than the likes of the iShares MSCI EAFE ETF EFA. The fund possesses an outstanding track record since its launch over EFA, having doubled the returns of the benchmark since 2012. It is also a more stable region considering the rest of the world so you are less likely to endure wild swings in return or risk like the Emerging Europe or Latin America groups.

Those building out a broad International Equity portfolio could use FEP and look to balance it with a Japanese fund to finish out broad Developed Market exposure, and pair it with a mixture of Latin America and Asia Pacific funds to fill the Emerging Market bucket. Those advisors or accounts that are able to be more tactical may find one of our relative strength models, like the First Trust International Model or Deutsche Bank Global ex-US Model (found on the models page), useful to add some relative strength flare to the account.