European ETF Offers Array of Prominent Companies

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

This week’s ETF Talk will be the first of five highlighting exchange-traded funds (ETFs) that invest in European companies. While these funds have different strategies, the one we will focus on today is the broadest: the Vanguard FTSE Europe ETF (VGK).

This fund invests in large companies in Europe’s most developed and significant economies. This focus means that a majority of Europe’s westernmost countries are well represented by the fund, along with countries located in the Scandinavia region of Europe.

VGK holds a selection of the most well-known, European-based companies you can find, and offers relatively low-risk exposure to big names in the region. For investors seeking a simple way to invest in Europe, this fund may be an attractive option.

VGK has a very low expense ratio, which currently clocks in at just 0.10%. Because many large European companies pay substantial dividends to their shareholders, VGK sports a 3.42% yield and makes dividend payments every quarter. Net assets total $10.9 billion.

As the below chart demonstrates, this fund had mixed performance over much of the last 12 months. However, international equities are on the rise again, and VGK has done better in the last couple of months as a result. VGK is up 5.38% since January.

Due to its weighting strategy, VGK’s funds are not all that concentrated in its top holdings, with just 17% invested in its top 10 largest positions. Among them are Nestle SA, Royal Dutch Shell plc, Novartis AG, Roche Holding AG and HSBC Holdings plc. These prominent names should be familiar to a globally oriented investor.

The countries most strongly represented here are the United Kingdom, at 30%, and Germany, France and Switzerland, which take up about 14% each.

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If investing in big and bright European stocks seems like a good move to you right now, the Vanguard FTSE Europe ETF (VGK) could be a fine starting point for your research.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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U.S. markets closed broadly flat this week as U.S. markets continue to consolidate their gains of the past three months. The Dow Jones pulled back 0.30%, the S&P 500 traded essentially flat and the Nasdaq rallied 0.60%. The MSCI Emerging Markets Index also ended the week where it started by rising a mere 0.18%. This flat performance was broadly reflected in your Smart Money Masters portfolio. Your biggest gainers were Liberty Broadband (LBRDK), Kraft-Heinz

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