An Attractive European Stock ETF
This is one of the cheapest and most comprehensive Europe-stock funds available.
Vanguard FTSE Europe ETF (VGK) is a strong choice for broad exposure to European stocks. It is tied with iShares Core MSCI Europe (IEUR) as the cheapest fund in the Europe-stock Morningstar Category and offers one of the most comprehensive portfolios available. The fund targets stocks listed in developed European countries representing the largest 98% of the investable market and weights them by market capitalization. This approach effectively diversifies risk and promotes low turnover. Prior to October 2015, the fund excluded most small-cap stocks but has since added them to improve diversification.
Developed European market stocks account for about a fifth of the world's investable market capitalization. Therefore, they should carry a meaningful weighting in a globally diversified portfolio. Investors who own broadly diversified international-stock funds may already have significant exposure to European stocks. But this could serve as a core holding for those looking to increase their exposure to this region. Most of the fund’s largest holdings are multinational firms with global operations such as Anheuser-Busch Inbev (BUD), Bayer (BAYRY), Royal Dutch Shell (RDS.A), and Nestle (NSRGY). Therefore, it does not offer clean exposure to the European economy.
Alex Bryan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.