Yahoo Finance The 10 Best European Stock ETFs on the Market
Here's how to think globally.
Diversification isn't just about mixing some tech stocks in with utility stocks -- it's also making sure you don't have all your eggs in one country basket. That means investing internationally. Among the regions you'll want to be exposed to is Europe, which doesn't offer a ton in the way of growth, but is ripe with large, blue-chip multinationals that pay thick dividends. And you can gain that exposure via a bevy of exchange-traded funds. Here are the top 10 U.S. News & World Report Best Fit Europe Stock ETFs.
#10: iShares Europe ETF (IEV)
The IEV is a collection of 365 European stocks that leans heavily toward big, blue-chip companies that pay big, blue-chip dividends. Top holdings like multinational food giant Nestle and health care giant Novartis help power a sizable yield of 3 percent. The fund is fairly well-balanced by sector, with five garnering double-digit weightings. Investors will just want to note that the U.K. is heavily overweighted at 30 percent of the fund.
Expenses: 0.6 percent, or $60 annually per each $10,000 invested.
#9: iShares MSCI Eurozone ETF (EZU)
This iShares Europe stock ETF is a bit more focused than IEV in that it only invests in European countries that use the euro as their currency. That immediately knocks out the U.K. and Switzerland, which combined make up nearly 45 percent of the IEV. What you get instead is a fund that's very lopsided in French (32 percent) and German (29 percent) stocks -- roughly 60 percent of a fund that's exposed to a total of 10 countries.
Expenses: 0.48 percent
#8: First Trust Stoxx European Select Dividend ETF (FDD)
The name says it all -- this fund is designed to deliver dividends via European stocks. Holdings comply with a number of quality screens, including having positive 5-year dividend growth, and that results in a batch of 31 stocks -- including Zurich Insurance Group and Royal Dutch Shell (RDS.A) -- across 18 countries that collectively yields a healthy 4.6 percent. Like IEV, FDD is lopsided in the U.K. (30 percent).
Expenses: 0.6 percent
#7: SPDR Euro Stoxx 50 ETF (FEZ)
The FEZ invests in stocks held in the Euro Stoxx 50 index, which is composed of 50 blue-chip stocks in 12 eurozone countries. So despite not having a specific focus on dividends, FEZ still has plenty of yield at 3.1 percent. That's thanks to holdings like the French duo of oil and gas titan Total SA (TOT) and pharma outfit Sanofi (SNY). Note the significant overweights in French (37 percent) and German (32 percent) stocks, as well as financials at nearly a quarter of the fund.
Expenses: 0.29 percent
#6: WisdomTree Europe Hedged SmallCap Equity ETF (EUSC)
The EUSC is one of WisdomTree's attempts at letting investors have it all -- enjoy the benefits of European stimulus measures, but don't sweat the big swings in the euro. And in this case, enjoy the higher growth prospects of small-capitalization stocks. The EUSC holds 228 European small caps, while also executing several currency contracts to hedge against the euro. Despite its small-cap focus, this young fund is projecting a 4.5 percent yield after just three dividend payouts -- an interesting fact given our next fund.
Expenses: 0.58 percent
#5: WisdomTree Europe SmallCap Dividend ETF (DFE)
The DFE specifically targets small-cap stocks that pay dividends, yet as far as a pure yield play goes, it actually falls short of EUSC at roughly 3 percent in 12-month yield. That's not necessarily a reason to avoid DFE, as a specific focus on dividend-paying stocks can work as something as a quality filter as well. And at least over the past year, DFE's basket of 361 holdings has outdone DFE, gaining 2.5 percent to a 4 percent-plus loss for the euro-hedged fund.
Expenses: 0.58 percent
#4: SPDR Stoxx Europe 50 ETF (FEU)
Like IEV tackles Europe while EZU tackles the eurozone, SPDR's FEU tackles more of Europe while the aforementioned FEZ is just a eurozone fund. As such, Britain (34 percent) and Switzerland (22 percent) are thrust into the spotlight, and top holdings like Nestle and Novartis should sound familiar. FEU isn't an outlier in that it has a thick weighting in financials, but it does stand out with nearly a quarter of the fund invested in health care.
Expenses: 0.29 percent
#3: Vanguard FTSE Europe ETF (VGK)
If you want Europe cheap, Vanguard has Europe cheap; the VGK is the thriftiest of U.S. News' 10 best ETFs to invest in the continent. VGK also gives you exposure to a monster basket of roughly 1,250 European stocks, including some mid-cap and even small-cap holdings. Otherwise, it's similarly built to the other core European funds mentioned above, including a 19 percent weighting in financials. Nestle is the unsurprising top holding here, followed by health care firm Roche, Shell and Novartis.
Expenses: 0.12 percent
#2: Deutsche X-trackers MSCI Europe Hedged Equity ETF (DBEU)
The DBEU is another hedged European fund, though this fund is very much large-cap in nature. Backing out the euro hedges, DBEU also looks like many of the funds on this list, with top sector allocations going to financials, consumer staples and health care, with heavy weight in the U.K. and top holdings that include Nestle, Roche and Novartis.
Expenses: 0.45 percent
#1: iShares Core MSCI Europe (IEUR)
The IEUR gives the VGK a run for its money, boasting just more than 1,000 stocks across all parts of the market-cap spectrum for a dirt-cheap annual fee. Top holdings, as well as geographic and sector weightings, are not meaningfully different -- the IEUR holds Great Britain at around 30 percent, is thick in financials and worships at the shrine of Nestle, Roche and Novartis. Because it's young, there's not much track record, but it did hold a 102-basis-point advantage over VGK in 2015.
Expenses: 0.12 percent
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