Looking to invest in Europe?
An ETF like iShares XEU might be suitable for you.
In this iShares XEU ETF review, I will discuss what you need to know about the all-equity ETF to see if it’s a good fit for you.
All-Equity Exchange-Traded Fund
BlackRock iShares XEU is an exchange-traded fund (ETF) that provides you exposure to a broad range of small-, mid-, and large-cap equities from developed market countries across Europe.
- Offers exposure to a broad range of equities from developed markets across Europe
- Grants convenient access to European equities in a single fund
- Provides significant international diversity to your portfolio
- Can be volatile if global equity markets are volatile
BlackRock iShares XEU ETF is an exchange-traded fund (ETF) designed to replicate the MSCI Europe Investable Market Index’s performance, net of expenses.
BlackRock iShares XEU is an all-equity ETF that allocates almost all of its funds to a basket of equity securities. It is classified as a medium-risk investment.
XEU effectively follows the performance of a broad range of small-, mid-, and large-cap equity securities across 15 developed markets across Europe.
XEU.TO is currently trading at close to $27.75.
XEU Key Facts
As of June 30, 2022:
- Ticker Symbol: XEU.TO
- Exchange: Toronto Stock Exchange
- Assets Under Management: $328 Million
- MER: 0.28%
- 12-Month Trailing Yield: 3.35%
- Currency Traded: CAD
- Registered Accounts Availability: Yes
iShares XEU ETF has a Management Expense Ratio (MER) of 0.28%, making it costlier than many other ETFs offered by BlackRock iShares.
Its MER is still significantly lower than any mutual fund product that provides investors with similar features and benefits
. Since the average mutual fund fees can be 2% or higher, ETFs offering lower MERs—like iShares XEU—is a crucial reason why many Canadians have preferred ETFs over mutual funds in recent years.
iShares XEU ETF allocates its funds only to equity securities that are diversified across developed markets in Europe.
Here is the growth of a hypothetical $10,000 if you had invested since XEU’s 2014 inception:
As of June 30, 2022:
| 1y | 3y | 5y | 10y | Incept. | |
|---|---|---|---|---|---|
| Average Annual Return (%) | -15.44 | 0.83 | 2.00 | – | 4.02 |
| Benchmark (%) | -15.57 | 0.79 | 1.96 | – | 3.95 |
Go to the Blackrock website for real-time performance numbers of XEU.
iShares XEU provides its investors with returns through capital gains.
iShares XEU’s dividend yield as of July 13, 2022:
- 12-month trailing yield: 3.40%
- Distribution yield: 4.23%
- Dividend schedule: Semi-Annual
iShares XEU is an all-equity ETF that diversifies its asset allocation across several sectors and market capitalizations from 15 developed economies across Europe.
Hence, the ETF can reflect the performance of the European equity markets based on the performance of stocks from different developed market countries in Europe.
The developed market countries represented in the underlying index for iShares XEU ETF include Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the U.K.
As of July 14, 2022, iShares XEU ETF has allocated 99.13% of its funds to mostly international equities. It holds the remaining assets in cash.
| Asset Class | Net | Short | Long | Cat. | Index |
|---|---|---|---|---|---|
| Canadian Equity | 0.00 | 0.00 | 0.00 | 0.07 | 0.00 |
| U.S. Equity | 1.36 | 0.00 | 1.36 | 1.70 | 1.34 |
| International Equity | 97.77 | 0.00 | 97.77 | 95.79 | 98.39 |
| Fixed Income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other | 0.22 | 0.00 | 0.22 | 0.08 | 0.27 |
| Cash | 0.65 | 0.00 | 0.65 | 3.25 | 0.00 |
Here is XEU’s top 10 holdings
As of July 13, 2022:
| Name | Sector | Weight (%) |
|---|---|---|
| NESTLE SA | Consumer Staples | 3.33 |
| ROCHE HOLDING PAR AG | Health Care | 2.37 |
| ASTRAZENECA PLC | Health Care | 2.06 |
| NOVO NORDISK CLASS B | Health Care | 1.88 |
| NOVARTIS AG | Health Care | 1.85 |
| SHELL PLC | Energy | 1.85 |
| ASML HOLDING NV | Information Technology | 1.84 |
| LVMH | Consumer Discretionary | 1.72 |
| HSBC HOLDINGS PLC | Financials | 1.29 |
| TOTALENERGIES | Energy | 1.23 |
As of July 13, 2022, its most significant asset allocation is towards the health care sector at 15.76%. Its second most significant sector exposure is towards financial services at 15.62%, while the industrials sector comes in third at a 15.27% weighting. Its lowest sector weighting is towards the real estate sector at 2.14%.
| Type | Fund (%) |
|---|---|
| Health Care | 15.76 |
| Financials | 15.62 |
| Industrials | 15.27 |
| Consumer Staples | 12.79 |
| Consumer Discretionary | 9.98 |
| Materials | 6.91 |
| Information Technology | 6.89 |
| Energy | 5.60 |
| Utilities | 4.25 |
| Communication | 4.15 |
| Real Estate | 2.14 |
| Cash and/or Derivatives | 0.64 |
| Other | 0.00 |
XEU it allocates a big portion of its funds to UK, France, Switzerland, and Germany companies.
As of July 13, 2022,
| Type | Fund (%) |
|---|---|
| United Kingdom | 25.56 |
| France | 16.03 |
| Switzerland | 15.52 |
| Germany | 11.37 |
| Sweden | 6.05 |
| Netherlands | 5.95 |
| Denmark | 4.27 |
| Italy | 3.74 |
| Spain | 3.68 |
| Belgium | 1.72 |
| Finland | 1.69 |
| Norway | 1.66 |
| Cash and/or Derivatives | 0.64 |
| Other | 2.11 |
XEU is a medium risk ETF:
iShares XIU is another all-equity ETF offered by BlackRock Canada.
XIU does not track the performance of the equity markets of developed market countries in Europe. Instead, it follows the performance of the Canadian stock market.
iShares XIU ETF holds the top 60 companies trading on the TSX in its portfolio based on market capitalization. On the other hand, iShares XEU ETF’s total holdings as of February 22, 2021, include 1,278 companies, therefore providing far greater diversity across different equities and countries
iShares XEH is another all-equity ETF offered by BlackRock Canada that tracks equity securities’ performance in the developed market countries across Europe.
iShares XEH has only one holding – iShares XEU ETF itself. Hence, its holdings are similar to iShares XEU ETF.
The primary similarity between iShares XEU ETF and iShares XEH ETF is that it tracks the same equity securities’ performance. The main difference is that XEH provides investors with returns hedged to the Canadian dollar.
iShares XEH ETF can be a viable alternative to iShares XEU ETF if you want to track the same equity securities’ performance without the volatility of currency exchange rates affecting your CAD returns.
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iShares XEU ETF is a medium-risk investment that invests mainly in European stocks.
If you’re looking to get European exposure in your portfolio, then XEU is a solid choice.
Not sure which ETF to choose still? Check out this list of iShares all-in-one ETFs.
