Courtesy of Tom Lydon, ETF Trends

Once considered a toxic destination for investors, Eurozone ETFs have come roaring back to life over the past few months due to improved economic data, falling bond yields and attractive valuations. Over the past 90 days, investors have been treated to a 7% pop from the Vanguard FTSE Europe ETF (NYSEArca: VGK), an ETF that comes with a solid 5.2% trailing 12-month yield.

The fact that the European Union office has statistical reported a growth trend after 18 months of recession is good news for investors. The EU recently showed GDP growth of 0.3%, a sign the region is breaking free from the clutches of the longest recession in EU history. [Fundamentals Looking up for Europe ETFs]

Although Europe ETFs like VGK and the iShares Europe ETF (NYSEArca: IEV), which is up 6.7% in the past three months have recently been in rally mode, more upside could be on the way. In the current quarter, the MSCI Europe Index is up 7.5% compared to a 2.7% gain for the MSCI USA Index, according to Morgan Stanley Wealth Management.

“In our view, the renewed interest in Europe likely reflects two factors. First, valuations and total returns are at the lower end of their long-term ranges, particularly versus those of the US. Second, the news suggests Europe has stabilized,” wrote Morgan Stanley European equity analyst Krupta Patel.

Investors are not just buying into the Europe recovery theme, they are buying Europe ETFs. While August was a dismal month for ETF outflows, particularly from U.S. equity funds, funds with a heavy dose of Europe fared much better. VGK hauled in $1.6 billion last month while the iShares MSCI EMU ETF (NYSEArca: EZU) brought in $974 million. [Four ETFs for the Eurozone Recovery].  For the remainder of the article from ETFtrends.com, please click here