Best European Funds UK- Invest with 0% Commission

Although the US stock market is where most investors focus their attention, Europe’s economy is in the midst of a transformation that could provide significant opportunities for investors. In this guide, we’ll review the 10 best European funds in the UK for 2021.

Best European Funds UK List

Below is our list of the top 10 European funds in the UK that you can invest in for 2021:

  • iShares Core MSCI Europe ETF (IEUR) – Overall Best European Fund UK – Invest Now
  • Vanguard FTSE Europe ETF (VGK) – Cheapest European ETF UK – Invest Now
  • SPDR Euro STOXX 50 ETF (FEZ) – Best STOXX 50 ETF UK – Invest Now
  • iShares MSCI Germany ETF (EWG) – Best German Stocks Fund
  • First Trust Eurozone AlphaDEX ETF (FEUZ) – Best Actively Managed European ETF
  • iShares UK Property UCITS ETF (IUKP) – Best European Real Estate Fund UK
  • JPMorgan BetaBuilders Europe ETF (BBEU) – Best European Volatility Fund
  • iShares MSCI Eurozone ETF (EZU) – Best Mainland Europe Stock ETF
  • WisdomTree Europe SmallCap Dividend ETF (DFE) – Best European Dividend ETF
  • Xtrackers STOXX Europe 600 Utilities Swap UCITS ETF (XS6R) – Best European Utilities ETF

Best European Fund to Invest in Reviewed

Let’s take a closer look at what makes our 10 best European funds for 2021 stand out.

1. iShares Core MSCI Europe ETF (IEUR) – Overall Best European Fund UK

If you’re looking for a single ETF that captures the breadth of the European stock market, the iShares Core MSCI Europe ETF is it. This fund holds over 1,000 shares from across Europe, including the UK. No single company makes up more than 2.7% of the fund’s portfolio, so it’s highly balanced.iShares Core MSCI Europe Chart

That balance means that the fund typically moves quite slowly. It returned just 8.70% over the past 5 years, although the fund saw a jump of 48.4% over the past year alone. The fund has $3.8 billion in assets under management and has a low expense ratio of 0.09%.

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Vanguard FTSE Europe ETF (VGK) – Cheapest European ETF UK

The Vanguard FTSE Europe ETF seeks to replicate the FTSE Developed Europe All Cap Index. It shares a lot in common with the iShares Core MSCI Europe fund, but it’s even cheaper – this ETF carries an expense ratio of just 0.08%. The Vanguard fund is also larger, with over $21 billion in assets under management.Vanguard VGK Chart

The fund invests in over 1,300 European stocks, including mega-cap companies like Nestle, Novartis, Royal Dutch Shell, and AstraZeneca. Of course, the fund also holds hundreds of small-cap companies, so it represents a blend of blue chip stocks and growth stocks.

67% of retail investor accounts lose money when trading CFDs with this provider.

3. SPDR Euro STOXX 50 ETF (FEZ) – Best STOXX 50 ETF UK

The SPDR Euro STOXX 50 ETF is a simple fund with only 50 holdings. It tracks 50 of the largest companies from across Europe, including LVMH, SAP, and Siemens. While it might not be the most representative of the total European stock market, it actually captures 60% of the market capitalization of the Euro STOXX 600 index.SPDR Euro STOXX 50 Performance

Despite being simple, the fund carries an expense ratio of 0.29% – not bad, but pricey relative to the Vanguard and iShares Euro ETFs. The fund currently manages $2.1 billion in assets and has generated a return of 9.0% over the past 5 years.

67% of retail investor accounts lose money when trading CFDs with this provider.

4. iShares MSCI Germany ETF (EWG) – Best German Stocks Fund

Germany has the largest economy in Europe and is home to a number of global companies such as SAP, Allianz, Daimler, and Bayer. With the iShares MSCI Germany ETF, you can invest directly in these German companies. The fund invests in 63 of the largest stocks in Germany.iShares Germany ETF Chart

Despite the size of the German economy, the fund’s performance over the past 5 years has lagged the broader European stock market. It generated returns of 7.84%, compared to around 9% for the Euro STOXX 50 index fund. It also carries an expense ratio of 0.51%, so this fund is best if you believe the German stock market is poised for a bullish run.

67% of retail investor accounts lose money when trading CFDs with this provider.

5. First Trust Eurozone AlphaDEX ETF (FEUZ) – Best Actively Managed European ETF

The First Trust Eurozone AlphaDEX ETF is an actively managed fund that seeks to beat the performance of the Eurozone market. It’s performed relatively well in recent years, producing returns of 9.9% over the past 5 years and 51.1% over the past year. However, note that it carries an expensive 0.80% expense ratio, which is to be expected for an actively managed fund.First Trust Euro ETF Chart

The First Trust Eurozone AlphaDEX fund is relatively small, with assets of just $27.3 million. So, you may have some trouble moving into and out of this fund, especially on days when trading volume is low. The fund typically has a spread of around 1%, whereas the spread for larger funds is close to 0%.

67% of retail investor accounts lose money when trading CFDs with this provider.

6. iShares UK Property UCITS ETF (IUKP) – Best European Real Estate Fund UK

Investing in Europe doesn’t mean you have to look to the stock market. The iShares UK Property UCITS ETF enables you to invest in property through a series of holding companies and REITs (real estate investment trusts). The property fund itself only has 40 holdings, but since many of those are REITs, the true number of investments across the UK is much higher.iShares UK Property ETF

Unfortunately for investors, the UK property market hasn’t been particularly active in recent years. The iShares UK Property UCITS ETF has a 5-year return of just 1.11%. After the 0.40% expense ratio, that doesn’t leave much in profits. Still, real estate can be a good hedge against fluctuations in the stock market in the future.

67% of retail investor accounts lose money when trading CFDs with this provider.

7. JPMorgan BetaBuilders Europe ETF (BBEU) – Best European Volatility Fund

The JPMorgan BetaBuilders Europe ETF is designed to help investors capitalize on directional moves in the European stock market. It invests heavily in 532 of Europe’s biggest companies so that when the market moves, you’re able to ride the wave. Of course, that also means that you are left with higher risk if the European market drops.JP Morgan BetaBuilders Eurozone ETF

The fund has performed well, producing a cumulative return of 18.2% since its inception in 2018. During last year’s volatility, the fund gained 46.9%. The fund manages $4.7 billion in assets and has a cheap expense ratio of just 0.09%.

67% of retail investor accounts lose money when trading CFDs with this provider.

8. iShares MSCI Eurozone ETF (EZU) – Best Mainland Europe Stock ETF

The iShares MSCI Eurozone ETF is a lot like our top fund pick, the iShares Core MSCI Europe ETF. The difference is that the Eurozone ETF only invests in countries that use the Euro – so markets like the UK, Norway, and Denmark are left out of the fund. The ETF invests in 240 stocks, the majority of which come from France and Germany.iShares MSCI Eurozone ETF

Despite leaving out several major economies, the fund has performed in line with similar all-of-Europe ETFs. It has grown 8.9% over the past 5 years, and jumped 55.0% last year. However, the fund’s 0.51% expense ratio makes it much more expensive than the iShares Core MSCI Europe ETF.

67% of retail investor accounts lose money when trading CFDs with this provider.

9. WisdomTree Europe SmallCap Dividend ETF (DFE) – Best European Dividend ETF

The WisdomTree Europe SmallCap Dividend ETF is an alternative fund that invests primarily in small cap stocks. Chances are, you haven’t heard of the top stocks in this fund – companies like Ferrexpo in the UK, TGS Nopec in Norway, and Anima Holding in Italy. The fund invests in hundreds of shares from across Europe, with around 28% of its total investment in the UK.WisdomTree Europe Small Cap Dividend ETF

Part of what makes this fund special is that all of the companies it holds pay dividends. Some of the dividends are reinvested in the fund, while investors can expect to receive an annual payout of 0.80%. That’s on top of the fund’s 5-year average return of 8.0% per year. The WisdomTree ETF has an expense ratio of 0.58%.

67% of retail investor accounts lose money when trading CFDs with this provider.

10. Xtrackers STOXX Europe 600 Utilities Swap UCITS ETF (XS6R) – Best European Utilities ETF

The Xtrackers STOXX Europe 600 Utilities Swap UCITS ETF is a unique fund that invests in utility stocks from across Europe. The fund doesn’t invest in these companies directly but rather uses swap contracts to gain exposure to changes in their share prices. This ETF is particularly good for investors interested in value investing since utility stocks are typically defensive stocks.Xtrackers Europe Utility ETF

The fund has a 5-year annualised return of 12.3%, although it lost 1.2% last year as investors moved money to capture the post-COVID European economic recovery. The fund has $20 million in assets under management and an expense ratio of 0.30%.

67% of retail investor accounts lose money when trading CFDs with this provider.

Why Invest in Best European Funds?

The European stock market has long been overlooked in favor of the US stock market. That’s in large part because the European market has underperformed the S&P 500 for many years – as evidenced by the chart below:

MSCI vs SP 500

But don’t write European stocks off just yet. Underneath the surface, several large trends are taking place which could very well offer major tailwinds for the European market going forward.

For one thing, Europe is finally catching up to the US in fostering technology stocks and innovation. The continent is seeing huge investments in new startups, which promises to accelerate the digitisation of Europe’s economy. Today’s startups could be tomorrow’s European equivalents of Apple and Tesla, and investing in European funds now allows you to get in on the ground floor while spreading your bets as widely as possible.

Another important development for European stocks is the separation of the UK from the European Union. Brexit hurt stocks in the Eurozone and the UK for many years, but now that it’s coming to a close, the market can move forward. Even though the UK is no longer part of the EU, it’s still included in most of the best European funds – so investors can benefit from the UK’s push to become a global hub for commerce and technology.

Europe could also see a booming economy once the continent finishes tackling the COVID-19 pandemic. European governments passed the largest stimulus package ever, which is expected to make it easier for high-growth companies to take off as the economy starts heating up again. The stimulus package will also help Europe invest in renewable energy and build a more resilient long-term economic foundation.

Best European Funds Brokers

Investing in the best European Funds UK is best done from the comfort of your computer or mobile phone using a trusted brokerage site. There is a good selection of trading platforms in the UK that offer such a service, but choosing the right one for you can take a lot of work.

To save you from countless hours of research, we’ve reviewed the two best UK brokers you can use to trade European funds today.

1. eToro – Invest in European Funds UK With 0% Commission

eToro commodity broker

eToro has quickly grown to become one of the top stock brokers in the world, and more than 20 million users worldwide have chosen it as their platform. The broker offers a zero-commission fee structure, a wide range of investment products, and a unique copy trading platform.

The variety of asset classes available on eToro includes stocks, ETFs, indices, commodities, currencies, and cryptocurrencies. There are more than 450 ETFs available already, and the broker is constantly adding more options to trade.

eToro doesn’t charge commissions but does charge a small spread for trade execution. The spread is the difference between the buy and sell price and is charged by most brokers. Furthermore, eToro does not charge any ongoing monthly account fees or even any deposit fees.

eToro copy portfolio

eToro is well known for its social trading and copy trading features, which give you the chance to learn from more experienced traders, share ideas, and copy the trades of top performers on the platform. When you choose investors to copy, you can review their performance and investing style as well as their portfolio.

This broker is regulated by the Financial Conduct Authority (FCA) and all UK accounts are covered under the Financial Services Compensation Scheme. So, up to £85,000 in your account is protected should eToro ever run into financial trouble – although this isn’t likely to happen in the first place.

Pros

  • Large number of asset classes and instruments.
  • Tight bid-ask spreads
  • Zero commission on trades.
  • Ability to copy the trades of other users.
  • FCA and FSCS protection.
  • User friendly platform.

Cons:

  • Limited technical analysis capabilities

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com –  CFD Broker With Competitive Spreads

Capital.com commodity broker

Capital.com is a trading platform that provides CFDs (contracts for difference) on all major asset classes. This includes stocks, ETFs, indices, forex, cryptocurrencies, and commodities.

This top-rated platform does not charge any trading commissions, and it has some of the lowest spreads we’ve seen among UK brokers. On top of this, Capital.com doesn’t charge fees for deposits or withdrawals. The broker is regulated by the FCA in the UK and CySEC in Cyprus, each leading regulatory body in Europe.

Capital.com has a proprietary browser-based web platform and apps for mobile devices. You can also connect your account to the popular Metatrader4 platform.Sell AMC Shares Capitalcom

Your capital is at risk

The broker has an expansive database of educational resources, complete with videos and written guides for beginner traders. There’s even an investment mobile app, which offers interactive lessons and quizzes on the basics of CFD trading.Capital.com Investmate App

As a CFD broker, Capital.com does not offer the option of investing in underlying assets. However, you can still trade dozens of ETFs, including many of the best European funds in the UK, with CFDs.

Capital.com enables the use of leverage in a 1:5 ratio, meaning that you can increase the size of your position up to 5 times your own capital. However, always remember that a leverage is a double-edged sword and could also amplify your losses if sound risk management is not applied. If you whish to bet on a certain instrument decline in price you can easily do so in this platform as it offers the option to go short.

Pros

  • Minimum deposit is just $20.
  • Excellent charting and analysis interface.
  • Known for competitive spreads.
  • Over 2,700 different instruments to trade.
  • Competitive overnight fees.
  • Regulated by the FCA.

Cons

  •  Limited product portfolio.
  • Cannot build custom investment strategies.

Your capital is at risk

How to Invest in Best European Funds on eToro

Investing in ETFs has been made much easier for retail investors thanks to innovative platforms like eToro. We’ll show you how to get started investing in the best European funds with this broker.

Step 1: Open an Online Trading Account

To open an account, you will need to provide a few personal details. Navigate to eToro’s website and click the ‘Join Now’ button. Choose a username and a password and enter your email address. eToro will send a code to your phone via SMS, which you will then need to verify on-screen to complete the registration process.

eToro sign up

67% of retail investor accounts lose money when trading CFDs with this provider.

Step 2: Confirm Identity

You must verify your identity as part of the registration process. All you need to do is upload a copy of your government-issued ID (passport or driver’s license) and a proof of address (utility bill or bank account statement).

Step 3: Make a Deposit

You will now need to deposit some funds into your newly created eToro investment account.

You can do this via the following payment types:

  • Debit/Credit Card (Visa, MasterCard, Maestro)
  • Paypal
  • Skrill
  • Neteller
  • UK Bank Transfer

Deposit Funds

You will need to meet a minimum deposit amount of $200 (about £160). Your GBP deposit will be converted to USD (0.5% conversion fee), as this allows you to access both UK and international stocks at the click of a button.

Step 4: Search for the best European Funds to invest in

Once your account has been funded, you can then buy your desired shares by simply typing its ticker symbol in the search box at the top of the screen, and then clicking on the ‘TRADE’ button.

IEUR eToro

67% of retail investor accounts lose money when trading CFDs with this provider.

You will then see an order box that asks you to enter the amount that you wish to buy. This is in US dollars and not the number of individual shares. You can invest as little as $50 (£40) worth of shares at eToro, so there is no requirement to buy a whole share of a European ETF.

Finally, click on the ‘OPEN TRADE’ button to complete the share investment process!

Conclusion

European funds are a great way for investors to diversify their portfolios and get exposure to the European stock market. Europe is in the midst of rapid changes, so there are plenty of opportunities ahead for investors looking to this market.

If you’re ready to purchase the best European fund in the UK right now, you can use eToro and pay no commission or stamp duty. The minimum investment per fund at this FCA-regulated broker is just $50 and the end-to-end process should take you no more than 10 minutes!

eToro – Buy European Funds with 0% Commission

67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

Can I invest in European stocks through mutual funds?

Yes, there are dozens of mutual funds that invest in the European or Eurozone markets. However, mutual funds typically have higher management fees and investment minimums compared to ETFs.

What is an ETF’s expense ratio?

A fund’s expense ratio is its annual management fee. This is typically charged as a percentage of your total investment rather than as a flat commission.

Do European stocks pay dividends?

Some European stocks pay dividends. If you are interested in dividend investing, you may prefer an ETF like the WisdomTree Europe SmallCap Dividend ETF, which invests only in dividend-paying companies.

What is the STOXX 50?

The STOXX 50 is a stock market index that tracks the performance of the 50 largest companies in Europe.

Can I invest in European funds using GBP?

Whether or not you can invest in European funds using GBP depends on your broker and the specific fund you choose. Many funds are priced in USD, but some are priced in Euros and others are priced in GBP. Most brokers will automatically make the necessary currency conversions for you, although this may incur a fee.

About Ilija Rajakovic PRO INVESTOR

Ilija Rajakovic is a Serbian-based investor and writer. His main focus areas include finance, trading, and macroeconomy. Ilija holds a Master’s Degree in Investment Banking and is pursuing his Ph.D. with a focus on sustainable finance and development. He is actively managing personal investment portfolios and advising private clients. And has run a website which generated actionable stock market ideas and provided insights into global economic landscape in the past. His economic articles have been publshed in highly respected magazines like NIN and Magazin Biznis.

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