The fund tracks the EURO STOXX 50 Index, which is made up of large caps ranking among the top by market capitalization in the eurozone. It holds stocks selected from the Euro Supersector indices on a market-cap-weighted basis, closely following the main current of eurozone equities.

It suits investors who want to diversify outside the US market and want concentrated exposure to eurozone large caps.

The ETF is managed passively (index tracking) by State Street.

The fund holds index constituents in line with their market-cap weights, but it uses a sampling approach rather than buying every single stock. It invests most of its assets in index constituents to reduce tracking error, and changes in constituents are reflected automatically according to the index rules.

• Holds only large caps from the euro currency area, so the exposure is clearly defined
• Large weightings in financials and industrials make it sensitive to the European economic cycle
• Listed on a US exchange, so it trades in dollars and pays distributions in dollars

Assets under management (AUM) stand at $4.2B, and the total expense ratio (Expense Ratio) is 0.29% per year.

Unlike broad developed-market ETFs, its range of countries and stocks is narrow, so the performance of individual large caps largely drives results.

European large caps repeatedly go through periods in which they follow a different path from US equities, depending on the direction of interest rates and the movement of the euro. Because of the heavy financial weighting, volatility tends to rise when the European Central Bank shifts its policy stance.

When there is demand for diversification to reduce the US concentration, money flows into eurozone products, and when worries about a European economic slowdown grow, money flows out. During periods when the euro strengthens against the dollar, currency effects add to performance.

Its strength is clear exposure to eurozone large caps, while its weaknesses are stock and country concentration and currency exposure.

The three products shown in the table, VEA, IEFA and VXUS, include Europe but cast a wide net across developed markets or the whole world, so they are far larger in size and tend to have lower fees. VT is also close to a broad core holding that captures the entire world at once. If you want to narrow your focus to Europe alone, VGK, which covers all of Europe, IEUR, which holds European large and mid caps together, EZU, which centers on large caps listed in the eurozone, and HEDJ, which applies a currency hedge, are also worth comparing.

Here are the points to check before buying this ETF. Because it is concentrated in eurozone large caps, you need to look at costs and concentration as well as currency and liquidity before making a judgment.

Losses widen when a European economic slowdown coincides with a weaker euro. With its heavy financial weighting, short-term declines can be steep when the European Central Bank changes course, and because the range of holdings is narrow, negative news at an individual company passes straight through to the fund.

It is worth considering when you want to hold eurozone large caps as one pillar of diversification outside the US. If broad diversification and low costs come first, we recommend splitting your allocation with a broad product such as VEA.