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Power Play: Risks of Investing in Europe

A worker checks the frame of a BMW automobile along the production line at the BMW plant in Munich, Germany.
Martin Leissl | Bloomberg | Getty Images
A worker checks the frame of a BMW automobile along the production line at the BMW plant in Munich, Germany.

With European stocks outperforming U.S. stocks this year, many investors are looking overseas. But investing in Europe does come with risks.

Stephen Freedman, head of cross-asset strategy at UBS Wealth Management Research, is making moves into the euro zone. He tells CNBC's"Power Lunch"on Friday he likes it more than the U.S. now on a valuation basis. However, the one thing that can derail his play on Europe is Greece.

"If Greece leaves the euro zone, it's unchartered waters. That will change our overall baseline in terms of growth," Freedman said.

Read MoreFTSE post record close above 7,000; Vedanta soars

Katie Nixon, chief investment officer at Northern Trust Wealth Management, likes Europe long-term, but thinks the market could be a bit ahead of itself.

"The weak Euro certainly helps corporate earnings for the large export driven Euro multinationals, but valuations are already elevated and may be pricing in a more speedy recovery. With growth slowing in the U.S. and across areas of the emerging markets, main drivers of this export growth, there may be some short-term disappointment," Nixon said.

The FTSE 100 closed above 7,000 for the first time. U.S. stocks also surged during trading on Friday.