The Vanguard FTSE Europe ETF (VGK) is a US-listed ETF that provides investors exposure to developed European equity markets by tracking the performance of the FTSE Developed Europe All Cap Index.
Vanguard FTSE Europe ETF (VGK) Chart
The ETF provides a snapshot of some of the most established companies across Europe in various sectors. The biggest markets represented are the UK (24.2%), France (15.6%), Switzerland (14.4%) and Germany (14%). Overall, it holds stocks of companies located in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
The market-capitalisation-weighted fund follows a passively managed, full-replication approach. It was launched in 2005 and currently holds 1263 stocks.
Vanguard FTSE Europe ETF Performance
The last few years have seen the ETF perform well, despite a few notable pullbacks. While at the end of 2024, there was a notable dip, 2025 has been very promising, with the ETF up 14% for the year to date, as of March 14.
| Period | Performance (as of February 2025) |
|---|---|
| Year-to-date Performance | +14.09% |
| 1-Year Performance | +11.41% |
| 3-Year Performance | +7.58% |
| 5-Year Performance | +9.48% |
Vanguard FTSE Europe ETF Top 10 Companies
| Company | Weight (% as of February 27, 2025) |
|---|---|
| SAP | 2.34% |
| Novo Nordisk | 2.15% |
| ASML | 2.15% |
| Nestle | 1.91% |
| Roche | 1.77% |
| AstraZeneca | 1.74% |
| Novartis | 1.67% |
| HSBC | 1.66% |
| Shell | 1.44% |
| LVMH | 1.37% |
European Stocks Forecast
The Bull Argument: As of March 2025, European stocks are outperforming the US. Analysts at Goldman Sachs expect European equities to rise as much as 6% in the next 12 months. The bank said in a recent article that “strong fourth-quarter corporate earnings, higher defense spending, and a lack of direct tariffs targeting Europe from the US appear to have contributed to the surge in stocks from Paris to Frankfurt.”
Furthermore, looking ahead, the bank sees further room for upside in European equities. Goldman Sachs Research Senior Strategist Sharon Bell Explained: “Markets move in front of data and economic news. The economic news for 2026 and 2027 has got better for Europe: Our economists now expect German real GDP to expand 2% in 2027, mostly because of more government spending.” Bell added that defense stocks have done well recently, while “there are also some defensive sectors in Europe that are quite interesting,” highlighting healthcare, telecoms, and cyclicals such as banks.
The Bear Argument: While the majority of recent analyses focus on the potential upside for European stocks given the recent rally, it is still important to consider the potential bearish perspective to have a balanced view before making an investment decision. Europe still faces challenges, including geopolitical tensions and slow growth in certain economies that could impact the outlook. Furthermore, a trade war that could erupt due to tariffs and the threat of further tariffs could impact the economy, and therefore, European equities (for example, US President Donald Trump has threatened a 200% tariff on any alcohol coming to the US from the European Union (EU).
Elsewhere, uncertainty surrounding fiscal policies and potential disruptions in global trade will weigh on investor sentiment. Fluctuations in currency values can also add an extra layer of risk for international investors.
Our View: Overall, the medium-term outlook seems positive, and the pushback against US President Trump may spur Europe and the UK to drive growth-focused policies. However, the longer-term view will require more to be done. Nevertheless, while European stocks have historically not offered the explosive growth some investors look for, the combination of established corporate fundamentals, steady dividend yields, and a robust regulatory framework in the Vanguard FTSE Europe ETF presents a potentially attractive proposition for long-term investors.
Who Should Invest in European Stocks
The ETF is ideally suited for:
European Economy Bulls: Of course, investors with a strong belief in the outlook for the European economy will find the ETF an interesting investment option.
Income-Focused Investors: Investors who value steady dividend payments from established European companies.
Diversification Seekers: Investors looking to broaden their exposure with high-quality equities from Europe, balancing their portfolios against higher-growth regions.
Risk-Managed Investors: Those who prefer a blend of capital appreciation and income stability in a mature, well-regulated market.
