Europe finally looks attractive for investors; with most of the political risks seemingly surmounted and the U.K. weakened in its Brexit negotiations, investors have been returning to the European markets, notes Gavin Graham, contributing editor to Internet Wealth Builder.

The iShares Europe ETF (IEV), which comprises the 350 largest European stocks including those in the U.K. and Switzerland, is up 17% in U.S. dollar terms year-to-date.

This compares with a gain of just under 10% for the S&P 500. This out performance has been helped by a 6% appreciation of the value of the euro against the U.S. dollar this year

Investors wanting a single easy way to play the rebound in Europe could do worse than to buy IEV, although this is not a recommendation. With 20% of its assets in financials, and 28% in the U.K., the ETF is exposed to any further weakness in sterling or a recurrence of Eurozone problems.

The iShares MSCI Eurozone ETF (EZU) has 32.3% in France and 29.5% in Germany and is a pure play on the euro area markets, but still has almost 20% in financials.

While Eurozone banks are in better shape than before the Greek debt crisis, the dangers of overvalued assets on bank balance sheets has still not been addressed successfully.

The four European ADRs that I have recommended are drinks giant Diageo (DEO), Swiss drugs company Novartis (NVS), consumer products group Unilever (UL), and telecom group Vodafone (VOD).

All have done well this year. Diageo is up 18%, Novartis 11.8%, Unilever 34.8% (helped by the rejected bid from 3G and Berkshire), and Vodafone a remarkable 56%. They remain a lower risk way to play improving European fundamentals while giving a reasonable yield.

Investors may also want to consider Dream Global REIT (Toronto: DRG). It is a specialist property company that invests in offices in major cities in Germany, Austria, and Belgium. Despite its 13% price increase this year, it still yields 7.5%.

While events have apparently moved in favour of the maintenance of the status quo in Europe, investors should bear in mind the underlying problems still faced by the continent. Deflation, slow growth, and weak demographics remain headwinds, and populism still poses a threat if growth doesn't pick up.

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