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ETF Specialist

Get Diversified Exposure to Europe at a Bargain Price

Vanguard FTSE Europe ETF is one of the cheapest and best-diversified funds in the category, but performance has been middling.

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While  Vanguard FTSE Europe ETF (VGK) is one of the cheapest and best-diversified European stock funds available, its performance does not stand out from its Morningstar Category peers, warranting a Morningstar Analyst Rating downgrade to Silver from Gold.

The exchange-traded fund transitioned to the FTSE Developed Europe All Cap Index from the FTSE Developed Europe Index in October 2015, which extended its reach to include small-cap stocks. This well-diversified portfolio includes over 1,100 stocks listed in 15 developed European countries, covering 98% of the investable market. It currently only parks 16% of its assets in its top 10 holdings. Market-cap weighting tilts the portfolio toward the largest companies in Europe, such as Nestle, BP, and HSBC, while keeping turnover low. Many of these companies have global operations, which makes their listing country less significant.

Daniel Sotiroff does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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