To put it mildly, European stocks have had a rough couple of years, as the eurozone sovereign-debt crisis continues to plague the continent. And with many economies in the eurozone continuing to teeter on the edge of default (or forced bailouts), investors around the globe have remained understandably leery of any investments made within the shaky economy. This investor fear becomes painfully clear when looking at the inflows between European ETFs [see also How To Pick The Right ETF Every Time].
There are a number of popular investing options in the European Equities ETFdb Category, but two funds best illustrate the difference between country specific and broad exposure: the FTSE Europe ETF (VGK, A) and the MSCI Germany Index Fund (EWG, B+).
Out of all the European Equity ETFs on the market, VGK and EWG separate themselves by being the largest funds in the space, with VGK holding over $5 billion and and EWG holding over $3 billion in total assets under management. While EWG focuses on the performance of the German equity market, VGK instead takes a wide approach to the European equity market by including 17 different developed economies [try our Free ETF Head-To-Head Comparison Tool].
The Bottom Line
With both funds faltering in 2008 with the crash of the European equities market, it is clear how beneficial the non-euro stocks were to VGK’s portfolio. As Germany continued to take charge of the recovery efforts over the next four years, investor confidence was also on the rise, as did inflows to EWG, until coming back down in 2012 and 2013. With the majority of Europe still in deep debt, VGK enjoyed only one strong year since 2008, but it will continue to improve with the economies. The inflows for these different strategies emphasize the importance of taking a good thorough look under the hood of an ETF to check out the weightings and holdings before establishing a position.
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Disclosure: No positions at time of writing.