Vanguard launches Euro Stoxx 50 ETF

Oct 26th, 2017 | By | Category: Equities

Vanguard has expanded its suite of UCITS ETFs to 23 with the launch of the Vanguard Euro Stoxx 50 UCITS ETF (VX5E). The ETF provides equity exposure to megacap stocks in the eurozone.

Robyn Laidlaw, UK head of distribution at Vanguard

Robyn Laidlaw, UK head of distribution at Vanguard.

Robyn Laidlaw, UK head of distribution at Vanguard, commented: “We continue to expand our range of ETFs in the UK and Europe, always with the aim of meeting the evolving needs of investors. The Vanguard Euro Stoxx 50 UCITS ETF provides investors with transparent and liquid access to successful companies, at a low fee.

“As a  pioneer of index investing for over forty years, Vanguard looks to provide investors with low-cost, high-quality, broadly diversified ETFs with which they can put together balanced, long-term investment portfolios.”

The underlying Euro Stoxx 50 Index covers 50 stocks from 11 eurozone countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

The index is weighted by free-float market cap, and each component’s weight is capped at 10% of the index’s total free-float market cap.

As of the end of September, the index is dominated by exposure to equities listed in France (36.4%) and Germany (33.2%), with the next largest country exposures being The Netherlands (10.2%), Spain (10.1%) and Italy (4.7%). The largest sector exposures are to financials (22.6%), industrials (15.0%), consumer discretionary (11.3%), consumer staples (10.7%) and health care (10.1%). The index is up 11.7% year-to-date.

The fund is listed on the London Stock Exchange in pounds sterling and Deutsche Börse in euros, and has a total expense ratio (TER) of 0.10%.

While Vanguard has a history of attracting market share using the strength of its brand and lower fees than its rivals, it is currently unclear whether such a strategy will be successful this time around. The market for Euro Stoxx 50 ETFs in Europe is relatively crowded. While the ten-basis-point fee on Vanguard’s product is lower than the 0.16% charged on the giant €9.2bn iShares Euro Stoxx 50 UCITS ETF, it is still double the cost of the joint-cheapest funds – the Source Euro Stoxx 50 UCITS ETF and the HSBC Euro Stoxx 50 UCITS ETF, each with a TER of just 0.05%. Their AUMs are €270 million and €120m, respectively.

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