3 ETFs To Access Europe

By Kevin Grewal

As strength in export growth and the Euro helped Europe into an economic recovery, many investors have turned their attention to the continent. 

Growth in Germany and France, two of the largest economies in Europe, helped the Eurozone post a 0.4% GDP growth in the third quarter of 2009 and pave the path to similar growth for the remainder of the year.  Additionally, European economies are benefiting from tight monetary policies and favorable projections in corporate earnings growth.  Lastly, Europe offers investors the ability to diversify by gaining international exposure while the benefits of investing in developed nations.

Although Europe seems to be positioned to emerge out of the global recession, it is equally important to keep in mind that unemployment rates in certain parts of the region are north of 10%, the European credit markets are still relatively tight and wages have remained flat.  To add to these woes, governments in some parts of the region like Greece have overspent which has some speculating that deflation may arise.

The easiest way to access Europe and potentially capitalize from its benefits is through the following ETFs:

  • the Vanguard European Stock ETF (VGK), which carries an expense ratio of 0.12%, holds a blend of 500 large-cap stocks and gives broad based exposure to the region
  • the iShares MSCI EMU Index (EZU), which carries an expense ratio of 0.52%, is heavily concentrated in France and Germany and focuses on large-cap value oriented stocks
  • the WisdomTree Europe Dividend ETF (DEB), which carries an expense ratio of 0.48%, holds 220 stocks and focuses on dividend paying companies enabling it to carry a yield of 8.09%.

When investing in these equities it is important to consider the inherent risks that are involved.  To help mitigate these risks an exit strategy which takes into account current volatility and the direction of each equity to identify price points at which upward trends could come to an end is important.  Such a strategy can be found at

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