Eurozone consumer confidence in June reached its highest level for 16 years, suggesting growth in the economic area could be accelerating sharply.

A flash reading on consumer confidence from the European Commission came in at -1.3 in June versus -3.3 for May.

Unemployment is at its lowest level since 2009 and the latest German Ifo Business Climate index, which has a good track record of predicting the future trajectory of Europe’s largest economy, returned its most bullish reading since 1991.

The index rose to 115.1 in June from 114.6 in May and against consensus expectations for a dip to 114.5.

In a statement Ifo president Clement Fuest described sentiment among German businesses as ‘jubilant’.

Concern about the threat from populist politicians has receded since Emmanuel Macron’s convincing defeat of far-right opponent Marine Le Pen in France and there now appears little concern about the German federal election on 24 September 2017.

Investors looking to tap into this improving picture have several options.

There are some exchange-traded funds which provide targeted exposure to the consumer discretionary names which are the most direct beneficiaries of increased consumer confidence

For example, SPDR MSCI Europe Consumer Discretionary (CDIS) offers exposure to names like Daimler, Adidas and Volkswagen, although it is worth noting circa 23% of the fund is invested in UK stocks.

Many funds with a European focus include UK stocks in their portfolio. If you don’t want UK exposure then Henderson EuroTrust (HNE) is a good example of a pure play on mainland Europe.

Managed by Tim Stevenson for more than 20 years, the investment trust has a good track record of beating its benchmark and delivering dividend growth. It has delivered 158% total return over the past decade, according to data from SharePad.

Its holdings include the operator of the Channel Tunnel, Groupe Eurotunnel and delivery service Deutsche Post.

Read our recent article on Europe-focused open-ended funds if you prefer unit trusts and Oeics to investment trusts and want some ideas.

Risks to the positive backdrop include the timing of the European Central Bank’s scaling back of financial stimulus and a better than expected showing for populist parties in German elections. (TS)

Disclosure: Daniel Coatsworth, who edited this article, owns shares in Henderson EuroTrust.

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