Okay, so in prior posts we’ve just looked at US stocks.  But there’s a whole world out there, and it has many profitable businesses, and stocks, as well.

And we know that diversification within our US stocks can lower risk.  Because it kind of evens out the ride, i.e. when some stocks go down, others may go up.

Similarly, adding international stocks can increase our diversification.  Because sometimes when the stocks in the US market are down, stocks may be doing better in Europe, or Asia or somewhere else in the world.

So we’ll look at international stock ETFs, and we’ll also look at emerging markets, which are countries starting to develop which may have a promising future.

But let’s start off with a well-established group of countries stocks, and that leads us to look at a European Stock Fund.

VGK – Vanguard European Stock Index Fund
Investing in the VGK is investing in the European stock market.  It has 1370 stocks, so buying VGK is buying a large part of all of the European stocks.

People invest in international stocks like the European fund because these are well developed markets with a long history, overall political stability and well trained workforce.

The VGK follows the FTSE Developed Europe All Cap index.  Also, “All Cap” tells us the stocks in this ETF are of large, medium and small European companies.  The VGK also pays a healthy 3.08% dividend, which is about double the average dividend of US stocks.  And it has a fairly low net expense ratio of 0.11%.

So it pretty much represents a large section of the European stock markets, is low cost, and pays a nice dividend.  And it’s been around since 2001, so it’s well established.

You’ll recognize a few of the top stocks in the VGK holdings.  There’s Shell, the large British multinational oil and gas company headquartered in London, England.  And my favorite, Swiss company Nestle, with their chocolate, because, well, who doesn’t love chocolate.

Adding a European fund like VGK to a US stock portfolio will increase your diversification and lower your risk.  But like all stock based diversification, it will not eliminate risk entirely.

Indexed to: Tracks an all-cap, market-cap-weighted index of developed European securities.

Expense Ratio: 0.11%

Total Assets: $23 billion

Annual Dividend Yield: 3.08%

P/E ratio: 13.13

Fund Inception: 08/13/2001

Top Holdings:

• NESN.SW    NESTLE SA-REG
• ROG.SW     ROCHE HOLDING AG-GENUSSCHEIN
• AZN.L          ASTRAZENECA PLC
• ASML.AS    ASML HOLDING NV
• SHEL.L        SHELL PLC-NEW /GBP/
• NOVN.SW    NOVARTIS AG-REG
• NOVO B.CO    Novo Nordisk A/S
• MC.PA        LVMH MOET HENNESSY LOUIS VUI
• HSBA.L        HSBC HOLDINGS PLC
• 1TTE.PA      Total SA

So that’s the VGK – Vanguard European Stock Index Fund ETF.

In our next post, we’ll look abroad to an international stock fund for Asia.  Because they have a number of profitable companies too.  And we just might want to invest in them.

So you’ll want to check it out when we post it.

And if you found this sample chapter from our latest book interesting, you can check it out at Exchange-Traded Funds For Beginners for free right here.