November 21, 2007 at 8:00 am by Tom Lydon
Is there an exchange traded fund (ETF) that invests solely in Europe? According to Morningstar Research, assets in European investments are at $52 billion, with 20 of those funds being around only since this year. Rob Wherry for SmartMoney reports that year-to-date those funds have returned an average of 12.9%. This is double the gains for their U.S. counterparts. The most popular ETF focusing on Europe is Vanguard European Stock ETF (VGK). The 560-stock fund owns shares that span the European continent, from Britain and France to Germany and Switzerland. It has a low expense ratio of 0.18%. Although it’s been around since 2005, it actually has a long track record. The diversified fund is actually a share class of an existing mutual fund.
Continental Europe can be accessed through iShares MSCI EMU (EZU) that stands for European Monetary Unit. This ETF invests only in stocks where the euro is used. With an expense ratio of 0.54% and a return of 24% per year since 2002, it makes up for the high price.
Wherry cautions that if you really want to narrow down your ETFs to specific countries, just be aware that the more narrow you get, the more risk you take on.
*For full disclosure, some of Tom’s clients own VGK.
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