Many U.S. investors tend to overweight domestic equities relative to their share of global market capitalization, a phenomenon known as home country bias. That bias worked against them in 2025.
After a volatile start to April following President Donald Trump’s rollout of tariffs on global trade partners, some investors began reducing U.S. exposure, a phenomenon termed the “Sell America” trade.
[Sign up for stock news with our Invested newsletter.]
By year-end, the U.S. stock market, as represented by the iShares Core S&P Total U.S. Stock Market ETF (ticker: ITOT), returned about 17%. Strong, but not the top performer. Notably, European equities, represented by the iShares Europe ETF (IEV), returned roughly 35% over the same period.
Some investors remain cautious about shifting allocations, noting that chasing recent performance can lead to poor outcomes. Still, valuation and income metrics suggest Europe is worth a closer look.
As of April, IEV trades at a lower price-to-earnings ratio of about 17.5, compared with 25.8 for ITOT. Income is another differentiator. European companies tend to return more capital to shareholders, and IEV currently offers a 2% 30-day SEC yield versus about 1.1% for ITOT, where large U.S. technology firms continue to reinvest heavily.
IEV itself is one of the longest-running Europe ETFs, dating back to July 2000, but it is not necessarily the best option. Despite its history, it carries a relatively high 0.6% expense ratio.
Today’s ETF market offers a wider range of lower-cost alternatives, country-specific variants and sector-focused strategies that target areas of strength in Europe such as health care and industrials.
Here are seven of the best Europe ETFs to buy today:
| ETF | Expense ratio |
| Vanguard FTSE Europe ETF (VGK) | 0.06% |
| iShares Core MSCI Europe ETF (IEUR) | 0.10% |
| State Street SPDR EURO STOXX 50 ETF (FEZ) | 0.29% |
| Xtrackers MSCI Europe Hedged Equity ETF (DBEU) | 0.45% |
| Xtrackers MSCI Eurozone Hedged Equity ETF (DBEZ) | 0.45% |
| WisdomTree Europe Quality Dividend Growth Fund (EUDG) | 0.58% |
| Select STOXX Europe Aerospace & Defense ETF (EUAD) | 0.50% |
Vanguard FTSE Europe ETF (VGK)
Investors looking for exposure similar to IEV but at a much lower cost may prefer VGK. Vanguard offers this ETF with a 0.06% expense ratio, which means a $10,000 investment would incur just about $6 in annual fees. The fund tracks the FTSE Developed Europe All Cap Index, a broad benchmark covering more than 1,200 companies across large-, mid- and small-cap segments.
Despite that breadth, VGK is market cap-weighted, so the largest European companies still dominate the portfolio. VGK’s portfolio has significant exposure to the U.K., France, Switzerland and Germany, with sector overweight in financials, industrials and consumer discretionary. The ETF is also available in mutual fund form as the Vanguard European Stock Index Fund Admiral Shares (VEUSX).
iShares Core MSCI Europe ETF (IEUR)
iShares recognizes that IEV is no longer the most cost-competitive option, which is why it offers a similar exposure through IEUR at a lower 0.1% expense ratio. IEUR is part of iShares’ “Core” lineup, designed as low-cost, passive building blocks for long-term, buy-and-hold investors. The ETF tracks the MSCI Europe Investable Market Index, providing broad exposure across large-, mid- and small-cap stocks.
In practice, IEUR’s portfolio looks very similar to VGK in terms of sector weights and top holdings, although it is slightly less expansive with just over 1,000 stocks. Because the two ETFs track different underlying indexes, IEUR can also serve as a tax-loss harvesting partner to VGK, reducing the likelihood of triggering the IRS wash sale rule while maintaining comparable market exposure.
State Street SPDR EURO STOXX 50 ETF (FEZ)
U.S. investors have a range of benchmarks to choose from, depending on how concentrated they want their exposure to be. While the S&P 500 is widely used, some prefer more selective indexes like the Nasdaq-100 or the Dow Jones Industrial Average. A similar approach exists in Europe with FEZ. The ETF tracks the EURO STOXX 50 Index, which includes just 50 large-cap companies from the eurozone.
That narrower focus makes it less diversified than VGK, but it may appeal to investors seeking concentrated exposure to established blue-chip firms. Sector allocations are tilted toward financials at about 25%, followed by industrials at 21% and technology at 15%. FEZ charges a 0.29% expense ratio, and it also has an options chain available, which allows investors to sell covered calls or hedge with puts.
Xtrackers MSCI Europe Hedged Equity ETF (DBEU)
Fluctuations in exchange rates between the U.S. dollar and the euro can impact returns for non-currency-hedged European ETFs. If the U.S. dollar weakens against the euro, European holdings translate into more U.S. dollars when converted back, providing a tailwind. Conversely, a strengthening U.S. dollar can act as a headwind, reducing returns even if the underlying stocks perform well.
Investors looking to remove this variable can use a currency-hedged ETF like DBEU. By neutralizing currency fluctuations, the ETF aims to reflect the local equity performance more directly. Over the past 10 years, a period marked by U.S. dollar strength, DBEU delivered a 10.7% annualized return, outperforming the unhedged MSCI Europe Index return of 8.5%. DBEU charges a 0.45% expense ratio.
[READ: De-Dollarization: What Would Happen if the Dollar Lost Reserve Currency Status?]
Xtrackers MSCI Eurozone Hedged Equity ETF (DBEZ)
The eurozone represents a narrower subset of Europe compared to DBEU’s broader continent-wide exposure. DBEZ focuses exclusively on countries within the European Monetary Union that use the euro. That means major markets like the U.K. and Switzerland are excluded entirely from DBEZ. Compared to DBEU, DBEZ has more emphasis in the technology, industrial and consumer discretionary sectors.
DBEZ also employs a currency hedging strategy, which has benefited during periods of U.S. dollar strength. Over the past 10 years, DBEZ returned 11% annualized, compared to 8.7% for the unhedged MSCI EMU Investable Market Index. However, if the euro strengthens against the U.S. dollar, hedged strategies like DBEZ may lag unhedged variants. DBEZ also carries a 0.45% expense ratio.
WisdomTree Europe Quality Dividend Growth Fund (EUDG)
EUDG tracks a fundamentally weighted index that selects 300 companies based on both growth and quality factors. Growth is measured by long-term earnings growth expectations, while quality is assessed using three-year averages for return on equity and return on assets. Once selected, companies are weighted based on their aggregate cash dividends paid, rather than their market capitalization.
For much of its history since inception, EUDG’s more sophisticated strategy maintained a performance edge over the MSCI Europe Index, though that advantage has narrowed from 2025 to the present. Investors willing to pay a higher 0.58% expense ratio and accept periods of underperformance may find EUDG as an appealing alternative to market cap-weighted European equity ETFs like VGK or IEUR.
Select STOXX Europe Aerospace & Defense ETF (EUAD)
“I think EUAD was the obvious ‘Trump trade’ and if anything, that’s an even stronger investment thesis now,” says Matthew Tuttle, CEO and chief investment officer at Tuttle Capital Management. “We believe the Iran war, and the refusal of many of the NATO allies to participate, will further drive a wedge between Washington and the European Union, meaning more than ever Europe is on its own for defense.”
EUAD provides index-based exposure to just over 20 European aerospace and defense companies, many of which are not included in U.S.-centric industry ETFs. One of the key tailwinds for EUAD is Europe’s rearmament cycle. The European Commission’s Rearm Europe Plan/Readiness 2030 initiative outlines up to 800 billion euros in spending, alongside a 150-billion-euro loan facility called Security Action for Europe.
More from U.S. News
Indian Stock Market: How to Invest in the World’s 5th-Largest Economy
6 Best Middle East ETFs to Buy in 2026
7 Best Thematic ETFs to Buy in 2026
7 Best Europe ETFs to Buy for 2026 originally appeared on usnews.com
Update 04/09/26: This story was published at an earlier date and has been updated with new information.
