European stocks constitute some of the biggest and best known companies in the world, including Nestlé SA (NESN), Volkswagen AG (VOW3), and SAP SE (SAP). Investors looking for broad exposure to the European market may consider buying exchange-traded funds (ETFs). Europe-focused ETFs provide diverse exposure to companies in this market, helping to mitigate the risk often associated with investing in individual stocks.

Key Takeaways

  • The European stock market has underperformed the broader U.S. market in the past year.
  • The ETFs with the best 1-year trailing total return are EDEN, EWN, and EWD.
  • The top holdings of these ETFs are class B shares of Novo Nordisk A/S, ASML Holding NV, and the class B shares of Telefonaktiebolaget LM Ericsson, respectively.

There are 38 Europe ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). European equities, as measured by the MSCI Europe Index, have underperformed the broader market with a total return of 8.9% over the past 12 months compared to the S&P 500's total return of 20.0%, as of February 3, 2021. The best-performing Europe ETF, based on performance over the past year, is the iShares MSCI Denmark ETF (EDEN). We examine the top 3 best Europe ETFs below. All numbers below are as of February 5, 2021.

iShares MSCI Denmark ETF (EDEN)

  • Performance over 1-Year: 34.2%
  • Expense Ratio: 0.53%
  • Annual Dividend Yield: 0.42%
  • 3-Month Average Daily Volume: 29,394
  • Assets Under Management: $174.3 million
  • Inception Date: January 25, 2012
  • Issuer: iShares

EDEN tracks the MSCI Denmark IMI 25/50 Index, which gauges the performance of a broad basket of Denmark-based equity securities. The ETF, the first to focus specifically on Danish equities, is comprised of 46 different securities, primarily of large-cap growth stocks. It provides exposure to a range of market sectors that make up the Danish economy, but is heavily tilted towards healthcare and industrials. The fund's top three holdings include class B shares of Novo Nordisk A/S (NOVO.B:CSE), a multinational pharmaceutical company; Vestas Wind Systems A/S (VWS:CSE), a manufacturer of wind power plants; and Orsted A/S (ORSTED:CSE), a multinational power company that provides renewable energy solutions.

iShares MSCI Netherlands ETF (EWN)

  • Performance over 1-Year: 29.3%
  • Expense Ratio: 0.51%
  • Annual Dividend Yield: 0.74%
  • 3-Month Average Daily Volume: 254,371
  • Assets Under Management: $306.3 million
  • Inception Date: March 12, 1996
  • Issuer: iShares

EWN tracks the MSCI Netherlands IMI 25/50 Index, which provides a broad-based performance gauge of the Netherlands equity market. The ETF is comprised of 56 equities that span a range of sectors that make up the Dutch economy. The fund provides particularly heavy exposure to the information technology (IT) sector, which makes up nearly 36% of the fund's total holdings. It follows a blended strategy, investing in a mix of value and growth stocks, primarily of large-cap companies. EWN is probably one of the best options for investors looking for pure-play exposure to the Dutch equity market. Its top three holdings include ASML Holding NV (ASML:AMS), a producer of advanced semiconductor equipment; class N shares of Prosus NV (PRX:AMS), a provider of technology platforms for various products and services; and Adyen NV (ADYEN:AMS), a provider of mobile, online, and point-of-sale payment solutions.

iShares MSCI Sweden ETF (EWD)

  • Performance over 1-Year: 26.2%
  • Expense Ratio: 0.51%
  • Annual Dividend Yield: 0.93%
  • 3-Month Average Daily Volume: 191,340
  • Assets Under Management: $435.4 million
  • Inception Date: March 12, 1996
  • Issuer: iShares

EWD tracks the MSCI Sweden 25/50 Index, which is designed to measure the performance of the large- and mid-cap segments of the Swedish equity market. The ETF provides broad-based exposure to the Swedish economy. But it is heavily titled towards industrials and financials, with approximately 38% and 26%, respectively, of its 38 holdings allocated to those sectors. The fund follows a blended strategy, investing in a mix of growth and value stocks, and is probably the best option for investors looking for specific exposure to the Swedish market. Its top three holdings include class B shares of Telefonaktiebolaget LM Ericsson (ERIC.B:OME), a multinational networking and telecommunications company; class A shares of Atlas Copco AB (ATCO.A:OME), a manufacturer of industrial tools and equipment; and class B shares of Volvo AB (VOLV.B:OME), a motor vehicle manufacturer.

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