Exchange-traded funds can offer a simple and inexpensive way to gain exposure to the stock market. These strategies offer exposure to European equities with a large market capitalization across both growth and value categories, and are considered promising by Morningstar’s fund analysts.
To help investors find ETFs focused on European large-cap blend stocks, we’ve screened 86 ETFs in Morningstar’s Europe Large-Cap Blend Equity category for those with either Gold or Silver Medalist Ratings.
A Gold rating means our analysts believe a fund has the greatest chance of outperforming its category over the long term, while a Silver rating means they believe it will outperform its relevant performance benchmark and/or peer group.
The first thing that catches the eye is the amount of different providers making the list:
- iShares Core MSCI Europe UCITS ETF EUR (Acc) IMAE
- iShares Core MSCI Europe UCITS ETF EUR (Dist) IMEU
- Xtrackers MSCI Europe UCITS ETF XMEU
- Amundi IS MSCI Europe ETF CEU2
- UBS (Lux) FS MSCI Europe UCITS ETF EUREUA
- SPDR® MSCI Europe UCITS ETF ERO
- HSBC MSCI Europe UCITS ETF HEU
- Invesco MSCI Europe UCITS ETF MXEUz
Screening for the Best Europe Large-Cap Blend Stock ETFs
We screened for ETFs with Gold or Silver Medalist Ratings that are 100% assigned by Morningstar analysts (rather than indirectly or quantitatively assigned). None of the eight ETFs that made it through the screen hold a Medalist Rating of Gold, nor are they actively managed. All of them track the MSCI Europe NR Index.
Here’s a closer look at the 3 largest strategies:
iShares Core MSCI Europe UCITS ETF EUR (Dist) IMEU
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★
The fund offers exposure to giant- and large-cap stocks across 15 developed European markets. Cost-wise, this exchange-traded fund offers a significant advantage with a KIID Ongoing Charge of just 0.12%, far below the Morningstar Category median fee of 1.36%. The iShares Core MSCI Europe UCITS ETF has outperformed, ranking in the top quartile against its category peers—including both active and passive funds—over three-, five-, and 10-year periods based on Morningstar Risk-Adjusted returns.
“Behind the scenes, BlackRock’s industry-leading technology and global presence provide a solid foundation for the fund’s management,” says Monika Calay, director of passive strategies research EMEA at Morningstar.
“The EMEA team benefits from a low turnover rate and leverages BlackRock’s Aladdin platform and global trading desks for efficient portfolio management.”
Xtrackers MSCI Europe UCITS ETF XMEU
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★
This ETF tracks the MSCI Europe Index, which earns an Above Average Process rating because of its comprehensive approach in capturing approximately 85% of the free-float-adjusted market capitalization across 15 developed European markets. The Xtrackers MSCI Europe ETF has consistently outperformed its peers, ranking in the top quartile against category peers over three-, five-, and 10-year periods.
“Julien Boulliat leads the ETF’s management team, which boasts an Above Average People rating, reflecting the team’s quality and stability. This team of over 20 investment professionals has adeptly handled significant changes, including the internalization of fund management, a shift from synthetic to physical replication, and a spin-off from Deutsche Bank”, Calay explains in her analysis.
Amundi Index Solutions—Amundi Index MSCI Europe CEU2
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★
This fund maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers. The index includes a diverse range of companies from various sectors, with the number of constituents typically ranging between 400 and 450. These constituents are selected based on market cap, liquidity, and other criteria set by MSCI. This share class led its average peer by an annualized excess return of 1.7 percentage points over an eight-year period. And it mirrored the performance of the category index over the same period.
“The risk-adjusted performance only continues to make a case for this fund. The share class outstripped the index with a higher Sharpe ratio, a measure of risk-adjusted return, over the trailing five-year period. These strong risk-adjusted results have not resulted in a bumpier ride for investors”, Morningstar analysts say.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
