With $8.8 billion in total assets, the exchange-traded fund (ETF) iShares MSCI EMU Index ETF (EZU) is the third-largest fund in the European equity markets, behind only WisdomTree Europe Hedged Equity (HEDJ) and Vanguard FTSE Europe (VGK), both of which were covered earlier in our ongoing series about European ETFs.
EZU is 83% allocated to large-cap companies, with 14% in mid caps and 2% in small caps. All of these companies are from countries that use the euro, with EZU thereby designed to exclude stocks from non-euro countries such as the United Kingdom, Switzerland and Sweden.
Since these three countries combined account for approximately half of the entire European market’s capitalization, EZU’s focus is not on the broad market, but rather concentrated on a few countries, such as France (32% of EZU’s portfolio) and Germany (29%).
Some risks to keep in mind that could affect EZU are euro-currency fluctuations and uncertainty due to national elections in Germany and France that are scheduled for later this year.
EZU has experienced ups and downs over the course of 2016, as evident in the chart below. However, it has performed well since December 2016 and its share price has climbed to new heights. As of March 2017, EZU had been trading at its highest levels since fall of 2015 and is up 9.31% year to date, versus a year-to-date 4.89% increase in the S&P 500. EZU has an expense ratio of 0.50% and a distribution yield of 2.84%.
EZU has more than 250 holdings in its portfolio, without investing more than 3% of the fund’s total assets in any single position. From a sector point of view, EZU is well diversified, with 20% invested in financials, 14.92% in industrials, 13.86% in consumer discretionary and 10.67% in consumer staples.
EZU’s top five holdings are Total SA, 2.77%; Sanofi SA, 2.53%; Siemens AG, 2.50%; SAP SE, 2.35%; and Bayer AG, 2.33%.
If you are seeking exposure to developed market countries that use the euro, I encourage you to look at the iShares MSCI EMU Index ETF (EZU) as a possible addition to your portfolio.
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.