Gaining Exposure to a Range of European Companies Through a Diversified Fund

(Note: fourth in a series on European-focused ETFs)

For investors interested in gaining exposure to stocks in the developed economies of Europe, the Vanguard FTSE Europe ETF (NYSE: VGK) may be a fund well worth considering.

VGK holds a diverse and comprehensive portfolio of stocks from developed European countries. This fund is unique because, in October 2015, it shifted to a different version of its original FTSE index. The new version allows for the inclusion of smaller firms in market-like proportion, which may be appealing to investors if the quality of companies is up to par.

VGK uses an indexing investment approach and invests all, or most, of its assets in the common stocks found in the FTSE Developed Europe All Cap index. In terms of European exchange-traded funds (ETFs), VGK charges an incredibly low fee. With massive daily volume and tight spreads, it is one of the most liquid funds in its segment.

This open-ended fund has an expense ratio of 0.08% and a dividend yield of 4.12%. According to Morningstar.com, VGK has sales growth of 0.59% and $11.74 billion in assets under management. Though the fund is down year to date (YTD), it has seen a steady growth of 17.08% in the last three months. VGK, like many other funds, both American and European, has been impacted by the coronavirus and absorbed the most damage in mid-March. However, as seen in the chart below, this ETF has showed a steady upward trend, and, as of late, it has surpassed both its 50-day and 200-day moving averages and continues climbing.

Chart courtesy of StockCharts.com.

Though VGK is an incredibly diversified fund, the majority of its holdings are in the health care sector, which makes up 16.20% of its total portfolio. Its top five holdings and their weightings in the fund’s portfolio are Nestle SA (NESN), 3.50%; Roche Holding AG Dividend Right Cert. (ROG), 2.75%; Novartis AG (NOVN), 2.07%; AstraZeneca PLC (AZN.L), 1.58% and ASML Holding NV (ASML), 1.46%.

For investors looking to broaden their holdings to include European stocks in developed economies, Vanguard FTSE Europe ETF (NYSE: VGK) may be worth examining. Its representative portfolio, low expense ratio of less than 0.10% and strong liquidity make for a strong ETF.

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.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.