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Will Europe ETFs Survive the Coronavirus Onslaught?

Sweta Jaiswal, FRM

The coronavirus outbreak continues to wreak havoc globally. Increasing number of infected cases outside mainland China has made it a serious concern to global economic growth. The virus has now spread to around 81 countries and territories around the world, claiming 3,203 lives along with 93,198 confirmed cases. The outbreak has spread to Europe and is deeply impacting the country’s tourism industry. On Mar 2, the European Centre for Disease Prevention and Control issued a statement explaining the new risk of coronavirus infection for Europeans as “moderate to high.” Moreover, the Organisation for Economic Co-operation and Development (OECD) has slashed this year’s growth estimate for the eurozone to 0.8% from 1.1%. However, it has retained the growth forecast for 2021 at 1.2%.

Italy, which has already been struggling with a weak economy, has witnessed a spike in infected cases to 2,502, with the death toll touching 79. Italy’s economy shrank 0.3% sequentially in the final quarter of 2019. In fact, the country was expected to hit recession in early 2020. The two most infected regions in Italy are Lombardy and Veneto in the north. These regions are home to economically important cities of Milan and Venice. Going on, Germany  (one of the world’s top 12 economies) is also close to slipping into recession. The country is currently facing around 203 confirmed coronavirus cases (read: ETF Strategies to Mark as Covid-19 Flares up Recession Scares).

NIKE, Inc. (NKE) has also decided to temporarily shut down its European headquarters in Amsterdam after one of its employees got infected with the virus. Notably, around 23 coronavirus-infected cases have been recorded in the Netherlands. In order to combat the spread, the European Commission has announced $252 million in funding. Moreover, the Italian government plans to spend 3.6 billion euros ($4 billion) to put a check on the outbreak.

Europe ETFs in Focus

Against this backdrop, investors can take a look at the following ETFs:

Vanguard FTSE Europe ETF VGK — down 10.1% year to date

The fund seeks to track the performance of the FTSE Developed Europe All Cap Index, which measures the investment return of stocks issued by companies located in the major markets of Europe. With an AUM of $13.98 billion, the fund has an expense ratio of 8 basis points (bps) (read: 5 Top-Ranked ADRs That More Than Doubled the S&P 500 in 2019).

iShares MSCI Eurozone ETF EZU — down 10.1%

The fund provides exposure to a developed market country using the euro for currency and tracks the MSCI EMU Index. With an AUM of $5.08 billion, the fund has an expense ratio of 49 bps (read: Top Foreign ETFs of 2019).

JPMorgan BetaBuilders Europe ETF BBEU — down 9.8%

The fund seeks investment results that closely correspond to the Morningstar Developed Europe Target Market Exposure Index. With an AUM of $4.16 billion, the fund has an expense ratio of 9 bps.

iShares Core MSCI Europe ETF IEUR — down 10%

The fund seeks to provide exposure to a broad range of European companies and tracks the MSCI Europe Investable Market Index. With an AUM of $3.88 billion, the fund has an expense ratio of 9 bps.

iShares Europe ETF IEV — down 10.2%

 The fund provides exposure to a broad range of European companies and tracks the S&P Europe 350 Index. With an AUM of $1.57 billion, the fund has an expense ratio of 59 bps.

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iShares Europe ETF (IEV): ETF Research Reports
 
iShares Core MSCI Europe ETF (IEUR): ETF Research Reports
 
iShares MSCI Eurozone ETF (EZU): ETF Research Reports
 
Vanguard FTSE Europe ETF (VGK): ETF Research Reports
 
JPMorgan BetaBuilders Europe ETF (BBEU): ETF Research Reports
 
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