The Top 6 European Equity ETFs (HEDJ, VGK)

Some projections show that European equities may be in for large returns in the double digits through 2016, which is higher than projections for most other international regions. While U.S. equities look to stay relatively flat, there is optimism growing about European stocks for the remainder of the year. It is the huge rebound of corporate earnings throughout Europe during 2015 that have renewed interest in the sector building much momentum thus far through 2016.

Beyond this revenue revival throughout the continent, business activities have also increased in direct response to the weakening of the Euro and the addition of easy-money policies available to businesses from the European Central Bank (ECB). As the forces continue to work synergistically, Europe’s economic growth and recovery continue to rise (apart from current geopolitical issues and risks). Equities ETFs can be a highly interesting solution for private as well as institutional investors who aim to track particular European indices as well as look for cost-effective and broadly diversified share investments.

European Equity ETFs provide investors access to European-based businesses (ETFdb.com 2016). These ETFs offer investors both, broad stock exposure in European countries, but also allow them to target different established and/or emerging markets or even a particular European industry or sector.

In the following we are going to have a more detailed look at the top six equities ETFs (in terms of the amount of assets under management – as shown by ETFdb.com 2016) which provide exposure to specific European stock markets.

The HEDJ US ETF with an asset class focus on equities has a total asset volume of around 14,600 USD (mil) - status from the start of March 2016. The fund’s current manager is Thomas J. Durante, and the ETF’s inception date was Dec. 31, 2009. The ETF’s expense ratio is 0.58 and the fund's management company is WisdomTree Asset Management. The ETF gives investors insulation against currency risk associated with the US Dollar and provides them direct access to equities in the Eurozone. The fund’s constituents are analyzed and their inclusion reweighted annually based upon dividend yield.

The VGK US ETF with an asset class focus on equities has a total asset volume of around 13,480 USD (mil) - status from the start of March 2016. The fund’s current manager is Gerard C. O’Reilly, and the ETF’s inception date was March 10, 2005. The ETF’s expense ratio is 0.12. The ETF's management company is Vanguard Group, and the ETF focuses on Western European Investment performances of the FTSE Developed Europe Index.

The EZU US ETF with an asset class focus on equities has a total asset volume of around 12,850 USD (mil) - status from the start of March 2016. The fund’s current manager is Greg Savage, and the ETF’s inception date was July 31, 2000. The ETF’s expense ratio is 0.48. The management company is BlackRock Fund Advisors and the ETF tracks on the MSCI EMU Index with a focus on publicly traded securities within the European Monetary Union (EMU) markets.

The EWG US ETF with an asset class focus on equities has a total asset volume of around 5,090 USD (mil) - status from the start of March 2016. The fund’s current manager is Greg Savage, and the ETF’s inception date was March 12, 1996. The ETF’s expense ratio is 0.48. The fund's management company is BlackRock Fund Advisors, and the ETF tracks the MSCI Germany Index to produce investment results that match publically traded securities specifically in the German market.

The DBEU US ETF with an asset class focus on equities has a total asset volume of around 3,425 USD (mil) - status from the start of March 2016. The fund’s current manager is Adnan Zee Waqar Syed, and the ETF’s inception date was October 1, 2013. The ETF’s expense ratio is 0.45. The fund's management company is DBX Advisors LLC, and the ETF follows the MSCI Europe USD Hedged Index to track its overall performance.

The FEZ US ETF with an asset class focus on equities has a total asset volume of around 3,230 USD (mil) - status from the start of March 2016. The fund’s current manager is John A. Tucker, and the ETF’s inception date was October 21, 2002. The ETF’s expense ratio is 0.29. The fund's management company is SSgA Funds Management, and the ETF monitors the Euro STOXX 50 Net Return Index to track and produce the investment results of European blue chip stocks.

Globally speaking, opportunities exist almost everywhere for equity investments. With an increase of optimism regarding the European equity markets for 2016, ETFs may provide interesting investment solutions for retail as well as institutional investors who intend to build up exposure in certain stock indices. No matter what, it’s clear that investors would be wise to understand the performance and risk features of these ETFs before making any related investment decisions.

Note: Data courtesy of Bloomberg