The British blue-chip index, the FTSE 100 (^FTSE), enjoyed a gainful year in 2021. The index gained more than 14% over the year, recovering its early pandemic losses. Moreover, the index continued its positive trend this week, registering a two-year high this week on January 17, 2022.
While the effect of the omicron variant is likely to create short-term hurdles for European companies, the overall European economy is expected to experience higher-than-average growth this year. Moreover, the European Union’s fiscal stimulus is expected to bear more significance in the near term. In addition, Goldman Sachs (GS) expects the 19-member euro region to grow at a pace of 4.4% in 2022 and 2.5% in 2023, outpacing the United States’ growth pace of 3.5% and 2.2% for the respective years.
Given this backdrop, the eurozone ETFs of Vanguard FTSE Europe Index Fund ETF Shares (VGK), JPMorgan BetaBuilders Europe ETF (BBEU), iShares MSCI Eurozone ETF (EZU), and iShares Core MSCI Europe ETF (IEUR) might be solid additions to one’s investment portfolio.
Vanguard FTSE Europe Index Fund ETF Shares (VGK)
VGK aims to track the performance of a benchmark index that measures the investment returns of stocks issued by companies located in the major markets of Europe. The ETF provides a broad-based exposure to the developed countries in Europe. Its holdings are spread across more than a dozen markets.
As of December 31, VGK’s total net assets stood at $28.70 billion. The fund has a NAV of $67.23 as of January 18. It has an expense ratio of 0.08%, significantly lower than the category average of 0.46%. VGK’s fund flows over the past month came in at $211.85 million.
VGK’s top holdings, as of December 31, include Nestle S.A. (NSRGY), with a 3% weighting, ASML Holding N.V. (ASML), with a 2.40% weighting, and Roche Holding AG (RHHBY), with a 2.30% weighting. The fund’s annual dividend rate of $2.16 yields 3.12% on the current share price. It has gained 9.9% over the past year and 1.8% over the past month to close yesterday’s trading session at $67.31. It has a beta of 1.11.
VGK’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of A, which equates to Strong Buy in our proprietary rating system. It has a Trade and Buy & Hold grade of A. In the A-rated, 80-ETF European Equities ETFs group, it is ranked #2. Click here to see the additional POWR Rating for VGK (Peer).
JPMorgan BetaBuilders Europe ETF (BBEU)
BBEU tracks an index comprising hundreds of European stocks from developed countries or regions. The index is designed to cover the top 85% of the float-adjusted market capitalization of European equity markets. BBEU provides diversified exposure to European equities at a reasonable price.
BBEU has $9.72 billion in fund assets and a NAV of $58.92 as of January 18. The fund has an expense ratio of 0.09%, which is considerably lower than the category average of 0.46%. As of January 14, its top holdings include NSRGY, with a 3.17% weighting, ASML, with a 2.59% weighting, and RHHBY, with a 2.39% weighting.
Over the past month, the ETF’s fund flows came in at $226.71 million. Its annual dividend rate of $1.22 yields 2.02% on the prevailing share price. BBEU has a beta of 1.08. BBEU has gained 11% over the past year to close yesterday’s trading session at $59.03. It has also gained 2% over the past month.
It’s no surprise that BBEU has an overall A rating, which translates to Strong Buy in our POWR Rating system. The fund has an A grade for Trade, Buy & Hold, and Peer. It is ranked #3 in the European Equities ETFs group. To see the POWR Ratings for BBEU, click here.
iShares MSCI Eurozone ETF (EZU)
EZU generally invests at least 80% of its assets in the component securities of its underlying index and in investments that have substantially identical economic characteristics to those component securities. The fund offers exposure to the equity markets of the EMU member countries. The ETF may provide a strong play for investors looking for exposure to the euro through the equity structure.
As of January 17, EZU’s top holdings include ASML, with a 5.37% weighting, LVMH Moët Hennessy - Louis Vuitton, Société Européenne (LVMUY), with a 3.77% weighting, and SAP SE (SAP), with a 2.53% weighting. Net assets of the fund, as of January 18, came in at $7.28 billion, and it has a NAV of $48.40. It has an expense ratio of 0.50%.
EZU’s fund flows came in at $1.74 billion over the past year. Its annual dividend rate of $1.11 yields 2.18% on the current share price. Over the past year, the ETF has gained 9.3% to close yesterday’s trading session at $48.53. It has gained 3% over the past month. EZU has a beta of 1.20.
EZU’s promising prospects are reflected in its POWR Ratings. EZU has an overall A rating, which equates to Strong Buy in our proprietary rating system. It has a Trade and Buy & Hold grade of A and a Peer grade of B. It is ranked #4 in the same group. Click here to see the POWR Ratings for EZU.
iShares Core MSCI Europe ETF (IEUR)
IEUR tracks an index of large-cap, mid-cap, and small-cap European stocks for a competitive price. The ETF owns almost a thousand securities, making it a well-diversified option for long-term investors aiming to build a balanced portfolio. The fund’s portfolio is dominated by the United Kingdom, France, Switzerland, and Germany.
As of January 18, IEUR has $5.41 billion net assets of the fund and a NAV of $57.31. Its expense ratio of 0.09% is considerably below the category average of 0.46%. The fund’s top holdings include NSRGY, with a 2.83% weighting, ASML, with a 2.31% weighting, and RHHBY, with a 2.14% weighting.
Over the past three months, IEUR’s fund flows came in at $210.41 million. Its annual dividend rate of $1.37 yields 2.31% on the prevailing share price. The fund has gained 10% over the past year and 2.7% over the past month to close yesterday’s trading session at $57.40. It has a beta of 1.09.
IEUR has an overall rating of A, which translates to Strong Buy in our POWR Rating system. The ETF has an A grade for Trade and Buy & Hold and a B grade for Peer. It is ranked #5 in the same group. Get all IEUR’s ratings here.
VGK shares were trading at $67.77 per share on Wednesday afternoon, up $0.46 (+0.68%). Year-to-date, VGK has declined -0.69%, versus a -3.88% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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